Market should spend more time in 18,000-20,000 range before forging ahead: Hemant Kanawala

economictimes.indiatimes.com:

Hemant Kanawala, Head-Equity, Kotak Life Insurance, says of late, we have seen that the largecaps have by and large stayed flat but we have seen a lot of rallies happening in the midcaps and smallcaps but as far as the largecaps have been concerned, that phase can continue for another six months. We will also have election uncertainty after six months. We believe that the market should spend some more time in the 18,000-20,000 before making further progress backed by earnings.

How would you evaluate the market at the moment? You are seeing it largely being range-bound. Is this a phase of consolidation? Will there be more buying opportunities? In the last two years, broadly the market has been consolidating in the 18,000-20,000 range. We made a high of 18,500 two years back and we have slightly moved up in line with the earnings. So, currently, the Indian micro is doing very well. Corporate India is reporting strong earnings growth. Even the PMI activity reported is on a good side. The Indian economy is doing well. But we are seeing challenges from the external environment.

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One of the most major headwinds is global liquidity. The US 10-year is close to 5% and that will move a lot of liquidity away from risk assets towards US treasury and second is the geopolitical tensions which is raising the price of commodities, in particular oil.
Now, oil is a very crucial factor for the Indian economy and if the oil moves above $100, clearly a negative for Indian markets. So, we believe