'Nifty may consolidate between 22,000 and 26,000'

Dalal Street bulls are keeping their fingers crossed in the hope of a blockbuster year as markets enter Samvat 2081. RAHUL ARORA, chief executive officer for institutional equities at Nirmal Bang, tells Puneet Wadhwa in an email interview that, with earnings disappointments in India, foreign flows may not return immediately. Edited excerpts:

- RAHUL ARORA

How are you welcoming Samvat 2081 - with a sense of caution or optimism that the worst of the market fall/correction is behind us?

In the old clichéd adage, I would say cautious optimism, and more cautious than optimistic, as the fact remains that we are in an earnings downgrade cycle and have been for some time now on an aggregate level.

The markets, at their recent peak, had gone past the 'priced to perfection' phenomenon, leading to severe punishments of witnessing bad news and results that missed expectations.

While domestic growth is relatively resilient, we are in the midst of cyclical moderation. There are signs of a rural recovery, but it is not very broad-based. Stagnant wage growth is affecting the urban working class in an environment of elevated food inflation. The Nifty might consolidate in the range of 22,000-26,000 for the next 12 months.

What's your best- and worst-case scenario for the Indian markets for the next year?