Market to remain subdued, see 7-13% rise in Sensex over next year: Pankaj Pandey

In an interview with ET Now, Pankaj Pandey, Head Research, ICICIdirect.com, shares his opinion on liquidity flows and their impact on equities. Excerpts:

ET Now: To talk about the overall taper fears, which are only going to intensify and that is going to put more pressure on the currency as well, how do you see the liquidity flows panning out from now on and what kind of an impact will that have on equities?

Pankaj Pandey: Again, setting of stage for Fed tapering, we would see volatility in the market. Earnings growth has really not been that great. So about 7% growth in earnings is what we are expecting and we are already trading at about 15.5 times forward basis and about 13.5 times FY-15 basis.

So in that sense, there is no scope for multiples to expand and given the shorter term volatility because of Fed tapering. But overall, we would not expect a very sustainable performance from the markets from hereon. Therefore, as in this particular year we have seen about 5% increase in Sensex, we would probably expect between 7% and 13% increase in the Sensex over the next one year. That is what at best one can look at , because that is what we would expect in terms of earnings, 7% being this year and 13% being the year after. Besides that we do not think that the markets would on a sustainable basis do much from current levels.