Ratnesh Kumar, managing director and CEO of BOB Capital Markets (BOB Caps), spoke to CNBC-TV18 about the current trends in the stocks markets and shared his outlook.

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“Oil is having a big factor in terms of some of the recent few days changes that you have seen in the markets thinking. However, if I was to look on a broader picture, I think couple of weeks ago also I spoke about the fact that market was driven up or held up by a few stocks which kept becoming more and more expensive and there is a strong logic still for that valuation gap to be unsustainable and that is what we are seeing right now in terms of be it corporate banks or be it oil marketing companies (OMCs), areas where the overvaluation is at least less of a concern and if the fundamentals are little better for them then they can obviously play some catch up,” said Kumar from BOB Caps, a wholly owned subsidiary of Bank of Baroda.

Speaking about the scheduled economic review meeting of Prime Minister Narendra Modi, Kumar said, “From market’s point of view, what we are looking at is especially on the currency if there is any activity which comes out as a result of that but I think beyond the intervention side of things, the bigger and more important thing for the currency will be things like oil and current account deficit (CAD). So yes, I think market would look for further confirmation on the fact that the economic recovery is here. The growth numbers were pretty good last quarter and how sustainable they could be for the remaining two-three quarters of year.”

With regards to the corporate results, he said, “Earnings recovery is here. It is very much set and embedded and this would be the first year in which you will see that earnings recovery for sure. Subsequently, 2019-2020 you could again have 15-18 percent type of earnings growth,” said Kumar.

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