The September quarter could turn out to be worse than Q1 in terms of growth momentum. And, over 70 percent of the stocks in Emkay coverage could be showing weaker top-line growth trends in Q2 when compared with Q1, Sunil Tirumalai, head of research and strategist, Emkay Global Financial Services, said in an interview with Moneycontrol’s Kshitij Anand.Q) We saw some outperformance in the broader market space for the week ended October 18. But, the overall sentiment is largely on the downside. Do you think the trend could sustain?A) The news flow is definitely weak when it comes to Indian economic indicators, and surely the corporate tax rate cut was not meant to give a quick fix to these issues.At the broader level, we saw over $20 billion annual transfer of cash from the govt to the corporate sector. However, we are positive on the long-term effects of the tax cut: across corporate profitability, more room to spend on opex and CAPEX, flow through into broader economy, etc.Q) Any top four-five stocks that are fundamentally sound and could turn out to be wealth creators in the next two-three years?A) We like Maruti Suzuki, ICICI Pru Life, L&T, and Jubilant Foodworks which could turn out to be wealth creators in the next two-three years.Q) What is keeping FIIs on the sidelines? But, the good news is that we have seen some buying in the last week?A) Global uncertainties on growth in developed markets (DMs), unresolved trade tensions, other geopolitical risks (Brexit, oil attacks etc) are keeping global fund flows on the edge.Overall, we believe that we could be nearing the end of FII selling (at least with respect to other peer EM countries) -- as India’s premium to EM peers is back to historical levels (and slightly below historical averages after baking in tax cuts into earnings estimates).At the margin, early signs of bottoming out in some segments, decent festive sales feedback (autos) etc should start making India relatively better off from an EM peer-set perspective.Q) Equity mutual fund inflow hits a four-month low in September on profit booking. The total outflow has pulled down the asset base of the MF industry to Rs 24.5 lakh crore in September-end from Rs 25.4 lakh crore at end-August. A slowdown in domestic flows does not spell good news for investors -- what are your views?A) Investors might be turning more risk-averse from shifting their savings basket from mutual funds to deposits and insurance. This might be due to volatility seen in the financial markets.However, equity flows are still positive (and continue to stay so). On the other hand, fixed income shows volatility – there, the concerns could be on frequent stress events in some issuers, global macro uncertainty, etc.Q) What are your views on the September quarter earnings from India Inc.? Do you think the recent cut in corporate tax rate will lead to more upgrades?A) The September quarter could turn out to be worse than Q1 in terms of growth momentum. And, more than 70 percent of the stocks in Emkay coverage could be showing weaker top-line growth trends in Q2 when compared with Q1.However, the margin trends may not be as bad, due to the benefits of lower commodity/input costs in some sectors. And, of course, the tax cuts would flow through – however, we notice that not all companies are moving immediately. Overall, Q2 numbers may not have much to cheer for the markets.Q) Does it make sense to go overweight on consumption stocks after the Cabinet increased DA for government employees and the interest is heading lower? What is your outlook on Autos, consumer durable, etc?A) In our Nifty Emkay Alpha Portfolio, we have turned overweight on autos and consumer goods recently, along with earlier overweight stance retained on cement, engineering and insurance sectors.In autos, we believe that we are nearing the end of the slowdown cycle, with festive sales decline seeing an improvement vs recent trends (Maruti is our top pick).We also believe that selective FMCG stocks should benefit disproportionately from tax cuts (upgraded Britannia and Colgate on this theme). With continued healthy growth, we also have an overweight position on insurance.Q) Banking stocks have got plenty of attention from the investor community. What are the big reasons for the same?A) Pockets of asset quality stress continue to emerge, which is preventing investors from taking confident positions in corporate lenders, and HFCs with real estate exposures.At the same time, the linking of lending rates in retail floating rate categories to external benchmarks (repo rate) could have some margin implications. We have an underweight stance on banks and NBFCs in our EAP.Q) Any particular sector which you are advising your client to avoid? If yes, what are the reasons?A) We would stay away from CV manufacturers (weak outlook on demand), IT services (low visibility on growth), telecom (industry dynamics still not supportive of profitable growth), in addition to banks and NBFCs mentioned aboveDisclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.