Economic Times5d agoBusiness3 min readIndia

Indian Equities Poised for Constructive Phase on Falling Crude Oil Prices, Says Sundaram Mutual Fund Manager

Indian equities crude oil prices inflation

Quick Look

Rohit Seksaria of Sundaram Mutual sees Indian equities entering a constructive phase due to falling crude oil prices easing inflation and currency concerns.
He anticipates a temporary earnings dip but expects banks and NBFCs to lead a rebound, with opportunities in data centers, hospitals, niche IT, and auto ancillaries.

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Why It Matters

Indian equities have faced months of macro pressure, with rising crude oil prices being a major concern. Falling crude oil prices are now seen as a catalyst for a positive shift in market sentiment and stability.

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Indian equities are poised for a positive shift as falling crude oil prices ease inflation and currency concerns, according to Sundaram Mutual's Rohit Seksaria. While expecting a temporary earnings dip, he sees banks and NBFCs leading a rebound. Seksaria also highlights opportunities in data centers, hospitals, niche IT, and auto ancillaries, anticipating a market re-rating even without immediate foreign investor inflows.

Indian equities are entering a more constructive phase after months of macro pressure, says Rohit Seksaria, Senior Fund Manager at Sundaram Mutual. Speaking to ET Now, he argued that the market's biggest overhang, rising crude oil prices, has largely reversed, changing the entire narrative around Indian macro stability.

Crude below $75 changes the story

With crude oil prices retreating to the $70-75 range, Seksaria believes the inflation and currency risks that had weighed on sentiment are easing. He pointed to softening G-Sec yields and the RBI's FCNR deposit scheme as additional tailwinds that should help stabilize the rupee. Together, these shifts have made him "quite constructive" on markets heading into FY27, even though he trades at just under 18 times one-year-forward earnings currently.

Earnings dip expected, but it's temporary

Seksaria does expect near-term earnings pressure. Nifty earnings growth projections of around 15% for the year will likely see downgrades, largely due to elevated raw material costs from the oil and petrochemical complex hitting margins in the first quarter and part of the second. However, he expects this to be a one-off disruption rather than a structural issue — with normalized growth returning in the second half of FY27 once companies work through higher-cost inventory.

Banks and NBFCs set to lead the rebound

The financial services sector — the largest weight in Indian markets — remains Seksaria's top conviction pick. He highlighted system-wide credit growth running above 17%, healthy asset quality across segments including microfinance, and stabilizing net interest margins after a difficult prior year. With valuations still reasonable, he sees meaningful re-rating potential in lenders, though he stopped short of predicting price-to-book multiples returning to 3x from current sub-2x levels, cautioning that a full re-rating would likely require foreign institutional investors (FIIs) to return in force.

Why FIIs are still staying away

On the question of foreign flows, Seksaria was candid: India continues to lose out to Korea and Taiwan, which are seen as more direct beneficiaries of the global AI capex cycle. But he argued that India's earnings growth is more secular and durable, while gains in Korea and Taiwan are more cyclical and could fade once new capacity comes online and AI-related spending slows — potentially within a year to eighteen months. Until then, he expects the pace of FII selling to slow rather than reverse outright, which alone could be enough to support stock prices.

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