Return of volatility normal for market; watch out for long term earnings & economic recovery: HSBC Global AMC

At a time when the market is reeling under volatile moves, experts at HSBC Global AMC believe that this is the time for long term investors to focus on the positives.

The lack of volatility earlier was worrisome, but its return has signalled that the market’s behaviour is normal in nature now.

“We have to focus on long term earnings…we are on the cusp of recovery and I think I would sit tight and wait. The best is yet to come,” Tushar Pradhan, CIO HSBC Global India told CNBC-TV18 in an interview. He added that investors need to understand that we have the fastest-growing economy in the world and earnings upmove will help the case.

Speaking on investor behaviour, Pradhan believes that the real test of the investor would be in case of a major correction if there is a substantial external element.

On the tech space, he believes that IT is trading at cheaper valuations against historical values. Having said that, the dollar growth continues to be constrained. Meanwhile, I the pharmaceutical space, he highlighted how companies continued to react to US FDA issues. But the valuations are in line with the earnings.

Among banks, he believes that the stronger names with better capital and access to markets will tide through the crisis. Those will be future growth leaders, he said, adding that it would be prudent to be picky in this space.