New Delhi, May 19 -- The 15% recovery in the markets from 10-month lows of 21,743.65 on 7 April through the 25,000 levels now is at best a pullback rally, and not a reversal of the bearish trend that commenced in October last year, says veteran investor Shankar Sharma, citing slowing earnings growth.

Sharma expects the market returns to remain unimpressive after five years of a bull run due to a slowdown in government capex and single-digit nominal economic growth, which translate into muted earnings growth. What determines market direction in the ultimate reckoning are earnings, not flows alone, says Sharma, referring to foreign portfolio investors turning buyers after six and a half months of sustained selling in the secondary markets....