Naveen Kulkarni, Head of Research, Reliance Securities, in an Interview with Himali Patel, explains India will continue to face slowdown in 2020

With fresh market highs, can we say we are in correction mode?

The market is not in a correction mode because correction means a significant decline. We believe the markets are taking a breather with the global markets. Also, visibility on renewal of growth prospects will be awaited. Festive season has been good and sustenance of that momentum will be critical. Auto volumes and channel inventory have reduced during the festival season indicating good retail offtake. The sustenance of good retail offtake in the automobile sector will be a key number. Apart from auto numbers credit offtake and resolution of some of the key credit cases will be very important for the banking system. The market will wait for clarity on some of these aspects.

Please talk about the performance of corporate earnings so far

Corporate earnings have been in line with expectations with some improvement in margin performance. The negative surprises have not been significant. Management commentary has been constructive. Some of the key corporate earnings which were better than expectations were SBI, auto sector margins, ICICI, HDFC Bank, Hindustan Unilever and other consumer companies. Key disappointments were Titan and OMCs. So, the overall picture is constructive.

Which are the host of potential risks you foresee in the year 2020?

Indian market is at a risk of continuing with economic slowdown and revival remains most critical. Apart from improvement in domestic growth the resolution of global trade challenges is another critical event. If the global markets were to enter a sell-off mode then Indian markets will face a lot of heat.

Recently, global rating agency Moody's changed India's outlook to 'negative' from 'stable' on the back of economic growth concerns. How are the long-term fundamentals of the economy?

The long-term growth prospects are intact and will improve with the reforms taken by the government. We do not see any major challenges in the long-term prospects.