Corporate earnings may grow at 15-17% CAGR in medium term; market fundamentals reasonable: Mayur Patel of 360 ONE Asset

livemint.com:

macroeconomic conditions and expectations of healthy corporate earnings in the medium term, the market the fundamental outlook seems reasonable, said Mayur Patel, Fund Manager, Listed Equity, 360 ONE Asset. In an interview with Mint, Patel revealed what sectors he is positive about at this juncture and what he thinks about the trajectory of monetary tightening.

We anticipate a marginal recovery in most commodity-consuming sectors, while metals and mining may report weak earnings in Q1.  Additionally, banks are expected to maintain resilient growth with low credit costs, a trend that is likely to continue throughout the year.  We foresee robust earnings performance in the financials, auto and auto ancillary, industrials, and telecom sectors throughout the year with the possibility of upgrades.  On the other hand, metals and mining are expected to weigh down the overall performance, while growth in the IT services sector may slow down. The performance of equity markets has often surprised investors, especially when there is a strong consensus among them.

This trend has continued over the past four years.  For instance, despite widespread belief in a prolonged bear market, we saw a remarkable 30 per cent surge within three months from the Covid-related market lows in April 2020.  Similarly, despite concerns about a potentially flat or negative return year in 2023, the market experienced a 10-12 per cent rebound over the last three months amidst a lot of noise.  Therefore, attempting to predict short-term market movements has limited value and does not contribute significantly to making informed decisions. Instead, evaluating the risk-reward dynamics from multiple perspectives is more valuable.  Currently, the BSE Sensex is