HSBC AMC: Cautious on mkts but liquidity remains robust

Tushar Pradhan, CIO of HSBC AMC said that he is cautious on markets but feels that liquidity remains robust. He said that good earnings are expected in second half of current year. Commodities will continue to gain as dollar weakens further. He feels that dollar’s weakness will be positive for India.

He further said that telecom valuations are depressed due to competition and feels that the investment in telecom stock will test investor’s patience.

About the markets, HSBC AMC is of the view that the valuations are ahead of fundamentals and in near-term, consolidation phase is likely. Valuations are of 17-18x FY10 earnings. About India story, HSBC AMC expect FY10 GDP in 6-6.5% range and sees FY10 corporate earnings growth at 5-10%.

HSBC AMC maintains marginal underweight on Consumer Discretionary, overweight on Consumer Staples, neutral on Energy, Overweight on Healthcare, marginal underweight on Financials, Overweight on Industrials, Underweight on Information Technology, Underweight on Materials, Neutral on Telecommunication and Underweight on Utilities.

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