The recent move in the market has been surprising because it does not corroborate with the ground data but it was expected, Mahesh Patil, co-chief investment officer, Aditya Birla Sun Life AMC, told CNBC-TV18 in an interview.
Globally, there is an increase in money supply and that is moving back into risk asset class. Moreover, with increase in money supply there could be some upward movement in global growth, he added.
“This optimism is rubbing on to India and so we have seen good inflows from FIIs in the last couple of months, which has taken the market higher,” said Patil.
“In the Indian markets still there is some lack of confidence with regards to financial markets but as risk money starts to pour in we will see that ease off and that could be base for recovery at the ground level in the economy,” he added.
When asked if market was penciling in a sharp earnings recovery for H2FY20, Patil said: “The trend in terms of quarterly numbers and economic data is not suggesting any meaningful acceleration in earnings this year except because of the corporate tax cut which would benefit a few companies, the headline earning growth would look better. We are looking at Nifty earnings growth around 16-17 percent.
“The story is more about next year because of various factors like the slowdown, problems in NBFC
According to him, the spaces that could benefit from the global growth are oil and gas, metals, pharma, and IT.
“The base for corporate earnings is very low and on that lower base there is a chance that you could see good earnings growth in the next couple of years in the mid-teens and that is what market is looking forward to,” said Patil.