S Krishna Kumar, CIO-equity at Sundaram Mutual Fund, spoke to CNBC-TV18 about the broader markets and shared his earnings expectations.
"Usually, when the market rallies after correction, the largecaps attract the initial passive flows and then the flows get more choosy and selective in terms of identifying better alpha," Kumar said on Tuesday.
"As we move into the calendar year and as better data comes through, the rally will get broad-based and the breadth of the market will get better and better. However, elections will keep investors more cautious," said Kumar.
"However, going forward as liquidity situation improves, there would be a better transmission of rates and better earnings trajectory," said Kumar.
Kumar said the house would continue to buy at all-time highs. “One should not look at indices alone but if you look at profit of companies have moved over the last two years and look at market cap to GDP etc., broadly there is a lot of steam left,” he said.
With regards to earnings, he said, "The visibility has improved led by the financials but the recovery in the fourth quarter won’t be broad-based. “Ex of financials you would see Nifty still reporting 12-15 percent growth but including financials the number could be upwards of 25 percent in the fourth quarter."
According to Kumar, "Credit crunch impacted the consumer discretionary and durables space and in turn impacting the manufacturing sector. So, there has been a manufacturing weakness seen in the fourth quarter."