Risk return profile begins to get a little more dicey: Anand Tandon

In a chat with ET Now, Anand Tandon, Independent Analyst, shares his views on the market outlook. Excerpts

ET Now: Markets are going up because we have not seen lot of supply. Now for the first time, the liquidity situation will get challenged courtesy fresh supply from the government. Do you think that is the biggest challenge for the market, that is a time when the might of this bull market will be tested?

Anand Tandon: Yes, there will be several factors that can upset the calculations. Currently, the euro world has also decided you will get negative interest rates. Probably, that has triggered off ETF buying and so on towards emerging markets but if you look at the global setup today, India is already overweight in almost every emerging market portfolio and therefore for it to go even more overweight from here is going to be a little more tougher. We are likely to find that in the domestic market interest rates actually going up rather than going down. So that will also mean that the second half of this year will be tougher in terms of both availability of capital as well as the price of it and as you mentioned if there is any kind of liquidity issue, then some of these challenges will manifest themselves in stock market reaction. Also, the valuations are no more very comforting. You are already assuming 17% growth this year and the market is then trading at 17 times or thereabouts current year earnings. So it is pretty much at the upper end of the curve. Can it go up further from here, possibly but from here on, the risk return profile begins to get a little more dicey at least for the near term.