Expect challenging environment for domestic equities till Diwali: Saurabh Mukherjea

In a chat with ET Now, Saurabh Mukherjea, CEO, Institutional Equities, Ambit Capital, shares his view on where the market is headed towards.

ET Now: What are you feeling after that rampant selling that one has seen all of last week? Does it test your conviction in the near-term or medium-term prospects of this bull market?

Saurabh Mukherjea: We have been fairly bearish going into the results seasons for the last couple of months.

We have been flagging extensively both in our published research reports and in our meetings with clients around the world. We were saying that we are heading for a fairly torrid time, not just in terms of Q4 results, but also for the results in the next two quarters. The numbers will be painfully weak. This was what our exepctations were.

From that perspective, the period between now and Diwali poses serious challenge to domestic equities. I do not think that the pain is going to abate soon. The pressure is going to abate, if the government actually manages to show progress on the policy front.

The land acquisition amendment is the key area where investors are looking for. The government would also be looked upon for progress in tendering projects in the road and railway sector. The market may see support from the market on the government's activities on policy making and implementation fronts. But, on the earning side, I am afraid we have got at least two to three quarters of serious pain coming our way.