Markets may see corrections; but these will be short-term: Dhiraj Sachdev, HSBC AM India

In a chat with ET Now, Dhiraj Sachdev, Senior VP & Fund Manager-Equities, HSBC AM India, shares his outlook for the markets.

ET Now: There is enough speculation in the market that PM Modi will make some big announcements in his maiden Independence Day speech. Is it reasonable to expect something big on Friday?

Dhiraj Sachdev: Markets have been running on high hopes and high expectations already. It is unreasonable to expect big bang announcements on specific dates. It can be done over a period of time as things progress. So, we do not really have to calculate and take things for granted that on specific days, there will be big bang announcements.

There is expectation on the government about pursuing economic reforms and taking important policy decisions over time. That is why the markets will see corrections. But they will be short-term in nature.

ET Now: A little over two months into the new regime, some would argue that the big idea from the new administration is missing. 60 days into office, there is nothing big, nothing special. There seems to be some degree of disappointment and it seems valid. Your take?

Dhiraj Sachdev: There are very high expectations, but it has been too short a tenure. So, taking full cognisance of the situation is not easy.

There have been some announcements on FDI in railways or insurance sector. A lot of allocation has been made to the road sector on the infrastructure side. There is a possibility that the government may be working silently behind the scenes to ensure that the reforms will be pursued over time. So, I do not think one should read too much into the last 60 or 90 days.

ET Now: In general, do you think somewhere markets for the moment are stuck between a rock and a hard place? Globally things are stalling a bit; global markets are in a risk-off. Locally, earnings are just about okay, and in the coming weeks and months, a lot of fresh paper supply from the government's stable and from the private stable will hit us.

Dhiraj Sachdev: There are too many questions within your question. Risk-off trade is too early to take a call on. We are not anticipating any hike in US interest rates at least in the next calendar year.

On the earnings side, they will pick up with a lag. This being a lean season, we cannot take a definitive call and extrapolate that the we will have numbers like the current ones into the third quarter or fourth quarter as well. We do expect a pick-up over a period of time.

On the results side if we see, there has been volume growth or uptick in cement, auto, and auto ancillary companies. It has been negative on the capital goods side. It has been a mixed trend. PSU banks have not delivered so far. We still have very high pressures on the NPA side, restructured books etc. But there are expectations that as the economy recovers, there will also be a trend reversal on the NPA side.