'Telecom to do well this year'

Soumendra Nath Lahiri, Head - Equity, L&T Mutual Fund, believes the reforms and policies announced in the past few months haven't picked up pace. He tells Varun Chabba why this might lead to muted growth expectations. What's your outlook for the near term (6 months to 1 year)? Markets did extremely well in 2012 due to the downgrade cycle nearing an end and strong FII inflows. A combination of better than expected numbers and strong portfolio flows ensured that we had a good last year. This further continued into the first two months of 2013. Clearly, it looked like the worst was behind us, and the pace of recovery from here onwards would be pretty slow and gradual against the backdrop of reforms and policies seen in the last few months. However, on the ground, the pace of execution has been tardy. This is clearly visible in areas which involve decision-making and policy changes such as the infrastructure space. Unless some of these issues pick up pace, I would think the coming years should see a much lower growth expectations. If we track the earnings per share growth over a time frame of 5 years, you will see that except for a good revival between 2009 and 2012, growth has been mediocre. This year, for instance, in 2013-14, our growth expectations would be around 10-12 per cent. So we would expect markets to track these kinds of growth rates over the next year or so. If you take a 20-year data, earnings growth have been in the region of around 14-15 per cent and markets have given similar kind of returns. Today, where things stand, we think the market should