Middle East stability can ease Indian markets : IIFL Capital

Characterise the market environment for us. As a fund manager, how are you using the current market decline?

Deepesh Pandey: Markets have fallen sharply in last 2 months and one already knows what are the factors impacting the market is primarily inflation, interest rate hikes which we have seen, some bit of monetary tightening, liquidity squeeze which is there in the system in general and global environment also has not been really supportive of late driven by concerns in what is happening in Middle East resulting in high crude prices of late. Clearly high crude prices are quite negative for India in terms of its deficit and current account deficit and also impact growth outlook. So these factors will continue impacting market for sometime. Earnings growth has clearly been slowing down if you look at the broader market.

While Sensex companies would have delivered in line but broader market is clearly seeing pressures and some sectors have seen much more pressure in terms of earnings and margins because of higher commodities. So earnings growth outlook has been mixed of late but we have seen reasonably high correction. We have seen also India underperforming most of the other region markets and developed markets significantly. Therefore, market should see stability. Possibly once we see some degree of stability in Middle East and in terms of crude prices, market should stabilise and build base for future rise going ahead.