Market veteran and Chief Investment Strategist at Geojit Investments, Dr VK Vijayakumar, believes that investors should temper their return expectations for the ongoing calendar year. He expects Nifty 50 to end the year at 2026 amid the West Asia crisis and rising crude oil prices. That said, Dr Vijayakumar expects equities to have the upper hand versus gold. Check his top sectoral picks and investment strategy in this interview with Mint. Edited excerpts:
What kind of impact do you foresee from the West Asia conflict, crude oil price spike on India Inc’s earnings in FY27?
It is difficult now to quantify the impact of the West Asian conflict on corporate earnings in FY27. We do not know how long the war will last and how long crude prices will remain elevated. If the average Brent price in CY2026 remains around $100, India’s GDP growth and corporate earnings will be impacted significantly. Before the war, the near-consensus earnings growth for FY27 was about 15 per cent. Higher crude for an extended period can impact earnings growth by up to 4 per cent. However, if the war ends soon, the impact will be negligible. Latest market indications suggest an end to the war soon. US August oil futures are trading at $80.
Has the Middle East conflict impacted your year-end Nifty 50 target?
The conflict has impacted India’s macros and corporate earnings for FY 27. Therefore, investors will have to tone down their return expectations. Nifty target for 2026 end has to be revised to around 26000 levels. Investors should temper return expectations.
Gold and equities are getting beaten in equal measure this year. Which asset class looks better?
With a higher dollar and rising bond yields in the US (the 10-year yield is now at 4.35 per cent), gold is under pressure. Some central banks have sold gold to support their currencies. Also, there is profit booking in gold after the huge run-up last year. The speculative trade in gold and silver is also unwinding. Equities offer better prospects for a sharp rebound now.
IT stocks have taken a severe beating in Feb. Can they emerge as a contra bet?
After the sharp correction, IT stocks have the potential to offer impressive short-term returns. Even though the Anthropic shock will continue to weigh on IT stocks, they now appear ripe for a short-term rebound. This is a tactical trade.
Which pockets look expensive to you, and what could offer value from a sectoral perspective?
FMCG continues to be expensive. Autos and financials look attractive. IT and Pharma will be resilient thanks to the rupee tailwind. Banks and autos have the potential to bounce back sharply from the present levels when the West Asian situation normalises.
What is the best strategy for investors amid a market crash – Buying the dip or holding their ground?
The strategy would depend on the risk appetite and investment time horizon of investors. Long-term investors with a high risk appetite can buy this dip. The present market construct is ideal for “Buy and hold”. Here, patience is the key. Risk-averse investors may wait and watch and buy when there are indications of normalcy returning to the market.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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