“Expect markets to be a little bit range bound… 23,000 on the lower side, 24,500 on the upper side,” he said. Even so, the broader trajectory remains positive. “We just believe that the recovery is delayed and not recovery denied,” he added.
He also pointed out that the recovery from market lows has been sharper than many people anticipated. “We are up about 8% on Nifty and 15 to 18% on the broader market indices,” he said.
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But a part of this rally was triggered by short covering driven by predominantly aggressive shorts, and that means the sustainability of the move depends on stronger triggers.
The bigger overhang remains macro volatility, especially in crude. “There have been multiple spates of false starts… crude touching $90 per barrel, and now it’s back to around $110/bbl – that is making the markets nervous,” he says.
This is now feeding into earnings expectations. “April saw about 1.2% earnings per share (EPS) downgrades… There will be a broader and consumer-led downgrade cycle,” he warns, suggesting that pressure could widen across sectors.
Also Read | Oil shock to last longer, Fed rate cuts unlikely in near term: Jahangir Aziz
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