Indian stock markets can rally 10-15 per cent from current levels in next 6-8 months on the back of earnings growth and good monsoon rains, says Piyush Garg of ICICI Securities.(Watch video)
“Earnings growth will catch up and from that perspective if monsoon is good then to my mind there is a fair chance that investors could get a 10-15 per cent return from levels we are seeing currently in next 6-8 months or say by the end of fiscal year,” Mr Garg told NDTV Profit.
He expects earnings to witness a pick up because wholesale price inflation (WPI) turned positive in the month of April after 17 months of contraction. WPI turning positive would mean that sales will also tend to grow for the companies, which should trickle down to profit growth, he added.
Mr Garg said it is essential that commodity prices don’t fall of the cliff, as was the case in January this year, for corporate earnings to thrive. But a sharp rise in commodity prices would also be dangerous, he warned.
“Macros are acting as tailwind for markets but investors need to be cautious if oil moves above $50, then macro tailwind can become macro headwind and a lot of things which went positive on macro front because of oil falling can then start to look questionable.”
Mr Garg also advised investors to be watchful of major macroeconomic events globally.
“Investors need to be very careful of what happens globally, because global situation can turn hostile very fast and that can pave a way for 500-700 point correction in Nifty.”
Mr Garg is confident that the markets are not likely to go and make new lows.