5 Questions with Atul Kumar – Fund Manager, Equity

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 Posted by Quantum on Friday, April 16, 2010

5 Questions with Atul Kumar – Fund Manager, Equity

1. How would Q4 earnings impact valuations and market movements?
The markets are currently trading at P/E based on growth prospects. To a certain extent, positive Q4 earnings are factored in the current valuations, but there may be some upward movement if earnings surprise.

2. What would drive earnings in the coming quarters?
Since the growth in FY10was relatively modest, there are expectations of 20% plus earnings growth for Sensex companies in this fiscal. The driving force would be the recovery of the capex cycle, infrastructure investments, consumer confidence backed by better hiring and salary growth.

3. What is the outlook on rising crude oil prices and how would it affect markets?
The recent price rise in crude is not justified by fundamentals as most of developed world continues to remain in a subdued growth phase, thereby depressing the demand for crude. Any significant price rise will have an impact on inflation.

4. How do you expect European situation to pan out?
There is a deadlock apparently in EU, with reluctance on part of major members to fund Greece. There can be an impact on European banks which hold Greek debt paper, if Greece defaults.

5. What is your outlook on currency movement in the short-term?
As has been the case recently, we expect the rupee to strengthen against the dollar and euro. Higher capital flows into India, which are likely to continue in India in the near term given its high growth, will lead to appreciation of the rupee.

This article was first published in DNA Money on Friday, April 9, 2010.