Gopal Agrawal, senior VP & head of macro strategy at DSP Investment Managers, in an interview with CNBC-TV18 shared his expectations from the fourth-quarter earnings and outlook for auto stocks.
With regards to earnings, Agrawal said, "Both the earnings numbers and management commentary from companies need to be strong. One is expecting a remarkable earnings growth this quarter, which is factored in by the market."
"For the current market optimism to continue there is a need for favourable macros, strong management commentary on growth and political stability," said Agrawal.
When asked how he would justify the rally seen in auto stocks, Agrawal said, "The stocks had corrected 30 percent from the top and the valuations related to market were at a reasonable level, so the risk-reward was in their favour."
"However, going forward now since the stocks have already rallied 15 percent from the lows, investors need to wait for monthly numbers and see the impact of that on the stocks."
Talking about corporate banks, he said, "One could see some uptick in margins on the back of pricing benefit. They are expected to report more than 20 percent core operating profit growth, he said. The house owns only one public sector bank."
According to Agrawal, "The returns from IT sector are expected to be moderate because of moderation in outlook on the deal side and rupee weakness is now behind us."