Home / Business / Money / These three resets will bog down mkt over next year: Ambit

These three resets will bog down mkt over next year: Ambit

The Narendra Modi government’s push to curb crony capitalism, rationalize the country’s wasteful subsidy spend and channel savings away from hard assets to financial assets — while a positive for the long term – is expected to be a short-term negative.

The Narendra Modi government’s push to curb crony capitalism, rationalize the country’s wasteful subsidy spend and channel savings away from hard assets to financial assets — while a positive for the long term – is expected to be a short-term negative.

This will have implications on earnings expectations, much of which are carrying a great deal of “unwarranted exuberance”, and will likely result in the unwinding of the popular trade into “second-rung cyclical”, Ambit CEO – Institutional Equities Saurabh Mukherjea told CNBC-TV18 in an interview. “We are bound to see a degree of moderation.”

Speaking soon after the brokerage released a strategy note urging clients to focus on high-quality companies, Mukherjea said he expects a “fairly punchy pullback” in earnings estimates for both FY15 and FY16.

Analysts on average forecast the Sensex earnings-per-share (EPS) to grow to Rs 1,800 in fiscal year 2015-16 and Mukherjea said that he expects the benchmark’s 12-month target to be scaled down from 36,000 earlier to around 34,000.

The expected reduction in subsidy spend is likely to hit companies dependent on rural consumption, many in the cement, autos, paints sectors, Mukherjee said. He added that he was positive on midcap IT and pharmaceutical firms.

Leave a Reply

x

Check Also

Rupee recovers 6 paise to 67.01

The rupee today recovered some lost ground by rising 6 paise to ...

Notes ban to have positive impact on economy

NEW DELHI: The government’s demonetisation move has led to widespread adoption of ...