A surprise 50-basis point cut in policy rate can lift market sentiment: Pramod Gubbi

In a chat with ET Now, Pramod Gubbi, VP, Institutional Equities, Ambit Capital, shares his view on what will drive Nifty going ahead.

ET Now: What has to change for Nifty to go to climb to 9,000 levels? What needs to change in terms of the environment, the macro set, and the earnings backdrop?

Pramod Gubbi: It is clear that earnings cannot change overnight. Typically you have a two to three quarter lag for corporate profitability to start showing up. So, earning cycle is unlikely to be the trigger for the Nifty to go up to about 9,000, any time before the next two-three quarters.

What can change the sentiment is a surprise rate cut of more than 25 basis points, which the consensus seems to be expecting.

There is an outside chance that it could be a 50-bps cut which can be a source of positive surprise.
Throughout June, even before the monsoon sessions, there are a number of things that the government can do particularly in the form of public expenditure in areas of infrastructure.

Clearly, there have been budgeted allocations towards sectors such as roads, rail, defence and so on. The industry needs to see some action there in terms of projects being awarded. That will be another catalyst for the market to go upwards.