Sanjeev Prasad, MD & co-head at Kotak Institutional Equities, spoke to CNBC-TV18 about stock market outlook, earnings and elections.
With regards to the earnings growth, Prasad said, "The numbers for Q2 were quite reasonable with more surprises than disappointments. For Nifty-50 index, we are looking at 15 percent earnings growth for FY19 and around 26 percent earnings for FY20."
According to Prasad, large part of earnings growth is on the back of normalization of earnings of the banking sector.
Sharing the market outlook, Prasad said, "One will have to keep an eye on upcoming events like the G20 meet, OPEC meet and state elections going forward but earnings seem to be less of a concern."
When asked about his views on commodities, he said, "The worry is what will transpire in the G20 meet with regards to China-US trade issues. It looks like tensions have again escalated and US could put additional tariffs on imports from China. If this were to happen then it could have negative implications on Chinese economy, which is already slowing and which in turn could impact commodities as a whole".
"However, aluminium looks good on back a deficit of 200 million tonnes in terms of supply-demand mismatch," he said.
Prasad is not worried about the domestic profitability of Tata Steel and continues to have the stock in their model portfolio. "Valuations not bad for JSW and Tata Steel," he added.
When asked about their reduced weightage on HDFC, Cipla and L&T, he said, "L&T still continues to be a hefty weight in portfolio at 5.5 percent."
The house is also upbeat on standard retail banks like HDFC Bank and IndusInd Bank although valuations are on the higher side.
Talking about elections landscape back home, Prasad said, "As of now, market has factored in that the BJP would most likely win Chhattisgarh and Madhya Pradesh and could lose Rajasthan but if it were to lose even MP then market would start getting worried about the prospects of the same government coming to power in general elections."