The market is witnessing gains because of a fine balance between various indicators but it is uncertain how long this balance can last, said Mahesh Nandurkar, MD & Head of Research, Jefferies, in an interview with ET Now.
"What we have seen over the last month-and-a-half or so is actually a culmination of a very fine balance of various global indicators, particularly in the US. Right now, we are seeing a very fine balance of all of these which is making the investors globally very happy and we are seeing the rally. but I am not so sure how long this balance can last," said Nandurkar.
Nandurkar pointed out that there seems to be a belief that the Fed is not going to be that hawkish anymore because the inflation seems to be getting better.
The concerns over recession have also abated after the jobs data and some of the other economic indicators indicated that things are not that bad.
Besides, the dollar index is depreciating a little bit and the 10-year bond yields in the US have gone down which is good news for emerging market investors, Nandurkar pointed out.
He also underscored that some of these indicators are a bit contradictory to each other.
"We are seeing that inflation is coming down and growth is slowing down as per Fed expectations and at the same time the recession fears have also abated. these are variables which usually work against each other," Nandurkar said.
Nandurkar said that "we may settle somewhere around 2.5% of earnings revision for FY23 on the downside after the June quarter result and this is the highest earnings revision on the downside that we have seen in the last several quarters."
"Back in the delta quarter of June 2021, we had seen earnings revisions downside of around 2.8% and this time it is about 2.5%. So just to put things in context, the earnings revision on the downside that we have seen in this quarter is equivalent to the delta quarter which is slightly unnerving," Nandurkar said.
Disclaimer: This article is based on an ET Now interview. The views expressed here are of the analyst and not of MintGenie.
