the initial euphoria around corporate tax cuts has given way to a sober climate how do you assess the market sentimentwhile the tax cut was a sentiment booster the real challenge is getting demand back amid the current slowdown this realisation has to some extent sobered down the impact of the tax cut this quarter numbers are likely to be weak for corporates despite the tax cuts the market is factoring in this situation the resolution for some of the stressed nbfcs has also not come through the euphoria on the equities side has not been transmitted to the credit markets unless that market starts to revive we will not see sentiments improving however the tax cuts have given some downside protection to the market without the cuts the market could have gone down further so while the bottom of the market has been taken care of the upside will depend on several factorshow the nbfc situation is resolved how demand fares during the festive season and so onunless the confidence about steady demand returns corporates are not likely to go for capex the fiscal room for government to stimulate demand is also limited so government spending is likely to be muted given this scenario it seems like the economic recovery will be slow and gradual having said that a lot of pessimism is already built into the prices this limits the downside for the markethow deeprooted is the consumption slowdown and what explains the contrasting trends in this spacethere is always some pent up demand and novelty value for certain items but that is not a reflection of the true underlying demand the slowdown in automobile segment started around the same time last year now the base will start to look more favourable owing to the festive season and can bring some improvement in numbers however the overall rural demand has been much weaker than we expected the monsoon has also been erratic this time we will have to see how the demand in the second half of the year pans out there are certain categories like air conditioners which are underpenetrated that are showing good sales however sales of television sets are not showing the same buoyancy so there is a bit of dichotomy in consumption trends but it is linked with the penetration levels and base effect there is no doubt that overall consumption is slowing down across the boardis the mid cap basket offering more investible ideasthere is value emerging in the mid cap space a lot of stocks have corrected sharply the outlook for the broader sector is weaker given the slowdown but that is a nearterm outlook this segment now offers more value as it got derated considerably without material changes in earnings outlook we are looking selectively at the mid cap space to add names to our portfolio where the earnings have not deteriorated too much at the same time one has to be careful as the prices are looking cheap for lots