Gautam Duggad, head of research, Motilal Oswal Securities

Market sentiment has turned positive following the near $20 collapse in the price of crude. But a lot depends on developments in the crude market over the next two to three months. There is a talk of the Organization of the Petroleum Exporting Countries (OPEC) and other countries cutting oil production. Hence, one needs to wait and watch whether OPEC indeed walks the talk or not. Besides, crude what one needs to factor in is that we were in an earnings downgrade cycle for long. We, too, have downgraded Nifty earnings estimates by another 4% post the second quarter results. But we expect Nifty earnings to grow 13% in the current financial year. However, if there is another 10% fall in oil prices, the market will shoot up further. This is because a benign crude outlook will meaningfully improve the macro reading; as inflation cools down, currency stabilises, and the current account deficit numbers get better.

Gautam Chhaochharia, MD and head (India research), UBS

A mere fall in oil prices is not enough to sustain a bullish sentiment. Other factors such as local elections and earnings cuts, amid rich valuations, still make the risk-reward for India unattractive. For FY19 and FY20, we expect 8% cut in earnings estimates. In fact, estimates were overly optimistic and, in the September quarter, there was some realisation that both growth and margins cannot sustain in the backdrop of rising commodity prices. The earnings cut is primarily owing to weak margins and growth, which will be below market expectations. In the first half of FY19, growth looked better owing to the base effect and, in the second half, the base effect will go away as some impact of the tightening financial condition will be felt. Macro conditions will definitely improve following the slide in oil prices and that will have a rub-off effect on the current account deficit. But the oil price correction is a bigger positive for the currency than equities.