'Indian market better bet than other EMs'

The one-year time correction has trimmed the valuations even as earnings growth in the second quarter ended September has exceeded the low expectations, making Indian markets a better bet than other emerging market (EM) peers, according to Manish Gunwani, head of equities at Bandhan AMC Ltd.

- Ram Sahgal [e-mail]

Positive macros and demand boost by fiscal and monetary stimuli will drive earnings higher and attract foreign investor inflows, subject to a weaker dollar, Gunwani said. Select small-caps have the potential to grow much faster than large-caps, offering fund managers big potential for generating alpha through active stock selection. Edited excerpts:

Earnings expectations for Q2 were quite muted. In this context, the actual numbers have done slightly better than the subdued expectations. For instance, expectations for the IT sector were low, but earnings beat estimates. Similarly, in the banking sector, results were better than expected. However, in capital goods, there was some disappointment. Remember, some sectors also had goods and services tax (GST)-related disruptions.Soin the fast-moving consumer goods sector, analysts were tracking the commentary on whether firms expect the (positive) impact of the GST rate cut on demand to sustain.