Expect earnings to be under market expectations, says Ashwini Agarwal

Financials led the recovery on Dalal Street on Friday, which helped the market end a volatile session at the flatline. For the week, Nifty and Sensex snapped its 3-week losing streak to end in the green.

In this week's episode of Editors' Roundtable, the spotlight is on what to expect from the second-quarter earnings, why theme-based funds are back in vogue and we take stock of how outflows from emerging markets are slowing.

Speaking to CNBC-TV18, Ashwini Agarwal, Founder & Partner at Demeter Advisors, said, “The world is in a very uncertain place. The focus is going to be on quarterly earnings from next week onwards, and I expect the earnings to be not as good as what the market is hoping for. I would focus a lot more on the commentary than the numbers themselves."

Agarwal added, "I think the commentary could be a little soft because at the margin, I see demand trends softening, both export lead as well as domestic. So I am a little cautious, I continue to be a little cautious and I see very limited room for a broad-based upside from here.”

On IT, Agarwal said, “A lot of the bad news is in the price. So IT is one area where I have been struggling, where I have been negative for a while, stock prices have come off. These best-of-breed companies in terms of governance in terms of cash conversion, in terms of dividend yields. So at some point they will become a buyer. IT is one area where I am looking for, for an opportunity to invest not right away, but maybe 5-10 percent lower.”