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Are strong micros really enough to support this market?Harsha Upadhyaya, Anand Shah, Gopal Agrawal, Equity Round Table,

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Key Take-Aways
  • Market are driven by four fundamentals which are earnings, earnings growth, liquidity and interest rates. Current concerns regarding liquidity and interest rates has led to valuation corrections.

  • While the macros have deteriorated from 2017, they are still benign and is not close to 2008. Challenging macros does affect micros on some level but ability of Indian corporate to weather this has improved from few years ago.

  • While some of the micros have been affected, it is more of a valuation readjustment. Between various sectors, there will be some rotation but broadly, the market's health is not in question.

  • Whenever macros worsen, relatively, small and mid caps take a larger hit because they need the tailwind to perform. The weaker macro has affected the small and mid cap earnings and valuations.

  • The negative impact of macros is going to play out more among small and mid caps, compared to large caps. If macros doesn't worsen, any correction in those segments due to speculation will lead to attractive plays.

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