The markets have become sombre and investors appear to be look forward to the New Year for fresh cues. Speaking to Bloomberg TV India, Vikas Khemani, CEO for Wholesale Capital Markets at Edelweiss Financial Services, says recovery in India Inc’s earnings growth and the Budget will be crucial for the markets in 2016.

Markets seem to have become a little quite. Why is it so?

Partly, it is seasonal because most of the people are in a holiday mood, they are travelling and not at work. But it is also partly true with the environment overall because markets are right now looking for some sort of direction post Fed rate hike. As far as Indian markets are concerned, we are looking for the next quarterly earnings now and maybe to get some sort of Budget-related excitement. So maybe in the early part of January we will start seeing excitement around the corporate earnings. How disappointing was the market with the way the winter session functioned, with the GST Bill again pushed back?

When the winter session started there was definitely a lot of hope which got built on probably the government passing the GST Bill. But it looks like it will not happen now. Now the hope goes to the Budget session and the government seems to be claiming it is prepared for an April 1 rollout if it gets passed even in the Budget session. So let us see how it happens. GST is good to have but if it does not happen, it is not the end of the world. India has grown 8-9 per cent in the past without GST. But it is a good move.

If you look back at 2015, we were waiting for the earnings recovery. Where are you anticipating it first?

Again, 2015 has been a year with which most people are disappointed. The one big reason is that it started with lots of expectations and everybody thought that the government will be able to carry out changes very fast and it will trickle down to the corporate earnings very fast, which did not happen.

But the good part is that now I think that expectations have toned down. The base is set and I think 2016 will be exactly the opposite of what happened in 2015. Slowly, with the power sector schemes, I believe that the banking sector will start getting much better than what they had been before. Even the utilities will do very well.

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