Nifty may fall another 10% in 3-6 months, says Macquarie's Sandeep Bhatia

Macquarie's Sandeep Bhatia expects the Nifty 50 index to fall another 10% in the next three to six months, despite the benchmark index already correcting 10% from its record high levels of 26,277 on September 27.

In an interaction with CNBC-TV18 on Wednesday, November 13, Bhatia said that the post-Covid-19 euphoria is well and behind and the markets are now more normal. "I think there is clearly more downside to this market, maybe another 10% easily," Bhatia said, adding that they have been very cautious on the markets for quite a while now and they continue to remain so.

"It is not only just earnings that are disappointing, our valuations are definitely very high. And you cannot always be a cheerleader to the markets, waving pom-poms and dancing just because the market is going up," Bhatia said.

Earnings downgrades that now come in will be in double digits after a disappointing earnings season, according to Bhatia, who adds that the real challenge will be what happens to fund flows over a period of time.

"Going forward, in 2025 the real big gorilla on the horizon is the US market. And the US market will see, both in terms of its economic activity and in terms of its political activity, significant investor interest. And therefore, to some extent, if we have a strong dollar going forward, all emerging markets, including India, will definitely be hit. So I definitely see correction in the market of up to 10% over the next three to six months," Macquarie's Bhatia said.

Subject to how the US markets behave, a stronger US Dollar, policy initiatives unveiled by the newly inaugurated Trump administration along with valuations, which, according to Bhatia, "remain challenging and demanding", will all contribute to the market correction.

Catch the full interview here.