Crude oil correction could be India's next big market trigger: Rohit Seksaria

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.

Beyond banks: Where else he's finding value

Outside financials, Seksaria flagged several thematic and bottom-up opportunities:

• Data centres, played through select power and capital goods stocks
• Hospitals within the broader pharma space
• Niche IT players, particularly in engineering technology and quick commerce
• Select auto ancillary companies gaining wallet share with consistent growth

On consumer discretionary names, including Titan and other durables, he turned more neutral after a strong recent run-up, though he sees room for a bounce-back in the sub-segment that uses crude derivatives as raw material, given the recent price correction.

The bottom line: Seksaria's outlook hinges on a single macro pivot: cheaper crude. If oil prices hold near current levels, he expects inflation worries to fade, earnings to normalize by the second half of FY27, and banking stocks to lead a broader market re-rating — even without an immediate return of foreign capital.