There won't be substantial earnings growth for the broader market in the quarter ending September excluding the tax impact, says Rakshit Ranjan, Portfolio Manager, Marcellus Investment Managers.
Sharing his views on the outlook for the market and the upcoming earnings season, Ranjan, however, said the June quarter was pretty robust in terms of earnings. "We experienced 17 percent year-on-year growth. We won’t be surprised if a similar number - high teens YoY earnings growth for our portfolio companies get delivered in this quarter as well,” he told CNBC-TV18.
“It is tough for the market but stock picking opportunities remain,” he observed.
Extending the point of fundamentals for the broader market, he said, “We are 10-15 percent higher in terms of valuations for the benchmark indices compared to where the fundamental support is and that is predominantly because the earnings have been weak for the Sensex companies and the Nifty companies for the last 3-4 years. Hence there is no reason to get excited about any sort of short-term rally either because of fundamentals or valuations for the overall benchmark indices.”
According to him, the rupee would continue to depreciate at least 5-10 percent over the next few months. Overall too the picture for the broader market does not look rosy, which is reflected in the Sensex-level performance or Nifty-level performance for broader indices, he added.
Talking about sectoral preferences in their portfolio, he said, “Our approach towards hunting for consistency of healthy fundamentals makes us gravitate towards small ticket day-to-day consumable products and services which are consumed by the masses, the middle class households. Since they are small ticket day-to-day items they tend to be resilient at a macro demand level compared to larger ticket products and services in consumption. Our portfolio gravitates towards retail banks, a couple of paint companies, adhesive companies, two FMCG companies and a couple of discretionary plays,” he stated.