Indian equities remain attractive over long term despite near-term risks: Report
New Delhi, July 27
Indian equities warrant a 'constructive' view over the long run due to demographics, rising domestic investment, a deepening financial system, diversifying supply chains and improving energy security, a report said on Monday.
The report from PL Wealth recommended investors consider a phased entry into quality large‑cap and large & mid‑cap names in the short term and kept an overweight call for the 24-60-month horizon.
The firm kept its overweight call on India intact over the long term "with mid-caps, small-caps and infrastructure-linked themes as preferred building blocks for SIP-based investors."
Over the medium term (6 to 24 months), attention should shift to domestic demand drivers - financial-asset penetration, infrastructure build-out and manufacturing localisation as oil-driven pressures fade and inflation tops out. The firm also noted room to add large private banks, industrials, healthcare, and select small-cap and flexi-cap exposure.
"India's underlying economic engine is running steady even as crude prices, a softer rupee and persistent foreign selling create near-term turbulence, pushing the firm to recommend a more selective, quality-first approach to equities," the report said.
"India is entering FY27 from a place of comparative strength, but that shouldn't be mistaken for calm - oil, the rupee and an unpredictable Fed under new leadership are all live risks," said Inderbir Jolly, CEO, PL Wealth.
The firm flagged a meaningful uptick in inflation risk, noting the RBI has lifted its FY27 consumer price index estimate to 5.1 per cent with a projected Q3 spike to 5.9 per cent.
"Persistently high crude, unresolved tensions in West Asia, and a rupee that has structurally weakened toward the 94.5-95 mark against the dollar are all cited as reasons markets could stay choppy in the months ahead," it forecasted.
The near-term earnings estimates continue to face downward pressure, with FY27 profit forecasts being trimmed across banking, consumption, infrastructure, pharmaceuticals and utilities - even as FY28 numbers are proving more resilient.
While participation across mid- and small-cap stocks has widened over the last six months, the report noted that the rally is still being led by a narrow set of sectors rather than the market as a whole.
— IANS
Reader Comments
Interesting perspective. I've been cautious on Indian equities due to foreign selling and inflation. This report makes a case for patience. Let's see if the RBI's inflation estimate holds.
I appreciate the long-term bullish view, but the report itself warns about oil, rupee, and inflation. Phased entry into quality names makes sense. Not rushing in, but not exiting either.
The report says FY27 earnings estimates are being trimmed across sectors. That's concerning. But FY28 looks resilient. So it's a wait-and-watch for me. 🧐
Domestic financial penetration and infrastructure build-out are indeed strong themes. I'm overweight on private banks and healthcare. But oil at elevated levels is a headwind for the economy.
The CEO's comment about India entering FY27 from a position of strength but not calm is spot on. Oil, rupee, Fed risks are all real. Selective quality approach is the way to go.
I think the report is right about mid-caps and small-caps for SIP investors, but only if you have a long horizon. Near-term choppiness could test patience. Let's stay disciplined. 💪
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