The December quarter earnings did not show any signs of recovery, says Tushar Pradhan, Chief Investment Officer, HSBC Global Asset Management. Pradhan expects earnings growth to be subdued for the next couple of quarters and sees a possible recovery only from the second half of FY17. In an interview with CNBC-TV18, Pradhan says a macro-economic recovery is still some way off. Below is the verbatim transcript of Tushar Pradhan’s interview with Latha Venkatesh & Reema Tendulkar on CNBC-TV18. Latha: What is the sense now? Is it the right time to step in or does it look like the market has now fully valued all the good news? A: That depends on how long you look far into the future. If it is between medium-term and long-term, this is a great time to be investing because of the fact that we have come down significantly from the peak that we achieved a couple of years ago. So intraday was almost 30,000 for the Sensex and from then we have taken a significant drop and if you look at the earnings growth potential that this country can have in the next two or three years, I think that makes the market fairly attractive proposition but today’s upsurge comes from the fact that the Fed has kept a dovish stance to most observers and as a result market is reacting. Reema: From hereon do you expect the rally to continue because retail people were sceptical in this rally from 6,800 to 7,500 but now that it is sustained, would you recommend that people can go ahead and buy if they have a six month time horizon? A: That is a generic statement of make. I will focus on the fact that if you look at earnings, it has been something which has not progressed further. So the quarter ending December has not generated much interest in terms of earnings revival. I believe the way the provisioning for the banks will likely go as well as the other inherent problems of lack of growth in our economy will again point to very weak quarter ending March which means in a few days time when we go into full financial year, we should be not surprised with the fact that earnings will be weak. So there might be volatility in the market once we get those numbers, but that is not a reason for people to get disheartened. However, two or three positive things that we need to concentrate on is that next year on a base effect, will substantially increase the earnings number and if you give this economy another 12 months the real revival will begin post that and then you will have another year of significant earnings growth on top of what you will see optically for FY17. If you are looking for robust earnings growth for the next two years as a result of these two actions, the market seems to be optimistic from my point of view to enter. However, volatility is going to be the case for the next quarter or so or maybe even two quarters for the fact that the real number are not likely to be seen in this earning season.