"Now, within utilities, you can very well define a few infra companies, a few cement companies, a few power companies but as a theme power should continue doing well," says Mayuresh Joshi, Head Equity, Marketsmith India.Give us a sense of what kind of momentum you are expecting when it comes to the markets next week, because we have had numbers come in from TCS, good set of numbers, IT is looking good. Next week, we get a little bit deeper into the quarter three earnings. Tell us which sectors you think are going to emerge as winners or if you could put it that way, the one with the least amount of cuts coming in when it comes to the earnings preview for quarter three.Mayuresh Joshi: So, two things, as we see earnings forecast chart put through Panaray, our institutional software, and the sector rotation graph that we probably have, which takes into account earnings that have happened till the quarter gone by and expectations of consensus earnings over the next few quarters, BFSI as a space selective probably looks the strongest as far as the EPS ratings are concerned. Obviously, the backing for such strong ratings is by strong numbers that have got exhibited in Q2 and expectations in terms of some areas of this segment still continuing to do well compared to the broader markets. The second element is also utilities is what is showing up in terms of the EPS ratings and strength. Now, within utilities, you can very well define a few infra companies, a few cement companies, a few power companies but as a theme power should continue doing well. Obviously, what you have probably seen in terms of infra and manufacturing over the first half of the last financial year or the year that is ongoing at this juncture, state elections, monsoons, general elections, all hampered order flows and therefore, expectations of order flows coming back probably seem to be the card. Agrochemicals, specifically as a space, also probably looks well-positioned, specifically the domestic players, because both their EPS and RS ratings probably very well-positioned. Strong set and the expectations of the good rabi season might mean that Q3 and Q4 might continue to do well for these companies along with backward integration that they are coming in terms of capacity expansions and deleveraging on their balance sheets. Last but not least, IT as a space becomes a perfect hedge of sorts in terms of expectations of stable earnings going forward. TCS has led the way so far. If other companies probably lay similar path in terms of commentaries and growth prospects going forward, this is one sector that might continue doing well, very-very strong EPS and RS ratings. And pharma selectively should continue doing well. So, you got these couple of defensive sectors expected to do well. Just a follow-up to what you just mentioned, that IT, agro, BFSI to some extent. Now, just to draw a comparison, what we saw in the last quarter, more misses than hits what we saw in the last quarter and the major of the drag was coming in from commodities, unsecured lending, and even the consumption. Is that pattern going to repeat, like, is there any green shoots or is this going to be like a xerox of what we saw or maybe similar to what we saw in last quarter's earnings?Mayuresh Joshi: A large part of the market is going to remain soft. There is no two ways about it. Not just seen initial signs of how consumption is slowing down in Q2, but it is becoming very-very evident as we are heading into Q3 as well. I doubt this is structural in nature, because certain pockets of the entire consumption spectrum are still doing well. So, some higher-priced items, whether it is luxury items, watches, then you are talking about high-priced cars, higher-priced real estate inventory still expected to do well. Having said that, the expectations in terms of how commodities might play out and again, if you probably look at hard commodities which is metals, both ferrous and non-ferrous, still expected to be soft. Even if you see some element of volume happening, the LME pricing is not supportive at all and because of that the entire operating leverage might not get played out. Obviously, we have seen HRC, CRC prices head lower and you have seen a lot of volatility as far as input costs are concerned as well. So, commodities as a space, obviously, a little bit more careful at this juncture. For soft commodities, again, you have to play the cycle very well, whether you are playing tea, you are playing coffee, whether you are playing sugar, which has again become a pure play ethanol story going forward. For soft commodities as well, there are a lot of global cues and therefore, the entire basket, one needs to be very-very stock-specific. I think you just cannot paint with a single brush for that. But largely, I think earnings for the commodities space should remain soft. Earnings for consumption as a basket largely should remain soft. Durables might do a tad bit better within the consumption basket compared to discretionary. Let us talk a little bit about the AMFI numbers that we have seen. Smids schemes are the ones that continuously see a good amount of inflow is coming in for the fifth straight month, it has been an inflow coming in for these schemes. Going ahead, over the course of the week or rather we have seen the biggest cuts coming in from the broader markets, it has been a week of the largecaps. Going ahead, as Rajesh is pointing out, the market could continue to remain shaky, do you think the largecaps would be a safer bet or now do you think it is time for the broader markets to pick up once again and what is it looking like on an overall market breadth basis?Mayuresh Joshi: It all depends on how numbers play out for the broader markets honestly and therefore I think larger markets might outperform the broader markets at least for this quarter. Now, within broader markets again as I said within the spaces that I discussed, you need to be very-very stock specific here, only go for stock that have leadership position and where earnings look a little bit more stable in this volatile environment. So, being very-very selective on broader markets.
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