A significant slowdown in China and further problems with bank funding in Europe are the only two factors that could lead to capitulation in Indian shares, he said in an interview.

On Tuesday data showed China's economy expanded at its weakest pace in 2-1/2 years in the latest quarter, with the sagging real estate and export sectors heralding a sharper slowdown in coming months.

Consensus estimates are already pricing in 10 per cent earnings growth for the fiscal year starting April 1, he noted.

Chances of this going further down are lower on hopes of a revival in the economy, rate cuts and rupee appreciation, said Agrawal, who manages 4.5 billion Indian rupees ($87.61 million) of Indian equities.

The extent and timing of rate cuts by the Reserve Bank of India will largely depend on tax collections and whether the rupee starts to appreciate after hitting a record low in December.

Mirae India is bullish on sectors that have rupee-linked costs and dollar-linked revenues, such as IT, pharmaceuticals and select metal stocks, as it believes the rupee's depreciation has not yet been fully taken into account.

The rupee was the worst performer among Asian currencies in 2011, losing nearly 16 per cent against the dollar.

On Tuesday the Indian rupee held on to a two-month high, buoyed by dollar inflows and a surge in the local equities as global risk appetite improved after better-than-expected growth data from China.

Over the past six months, the consensus estimate for earnings per share for India's benchmark 30-share index for fiscal year 2013 has fallen to 1,250-1,260 rupees from more than 1,400 rupees, Agrawal said.

Mirae Asset's India Opportunities Fund, ranked fifth by Lipper for Indian Equity total return performance, has about a fifth of its total allocations in software and pharma stocks.

Its Emerging Bluechip Fund has about 17 per cent of its assets in those sectors.

The fund is bearish on select infrastructure and capital goods and telecom companies, which require heavy capital investment.

Mirae's India Opportunities Fund has 5.9 per cent of total assets in capital goods, construction and telecom stocks. Its Emerging Bluechip Fund has 2.14 per cent of its assets in those sectors.

The fund expects the RBI to cut the cash reserve ratio -- the amount of funds banks need to hold at the central bank -- as a way to boost liquidity, and then cut repurchase rate over the next four to five months, Agrawal said.

The central bank raised rates 13 times between March 2010 and October 2011 in its attempt to tame inflation.

Earnings by Sensex-30 stocks will boosted by 100 billion rupees if state-run ONGC, which has a 3.3 per cent weighting in the index, is not required to take on more than a third of the government's expected additional fuel subsidy.