NBFCs, autos, and multi-decadal themes gain traction as India eyes post–West Asia stability boost: Nitin Raheja

As global crude prices soften and geopolitical tensions in West Asia show signs of easing, market participants are recalibrating their India portfolio strategy with a renewed focus on financials, autos, and long-term structural themes such as defence, power, and digital infrastructure.

In an interaction with ET Now, market expert Nitin Raheja from Julius Baer Wealth Advisors outlined a cautiously optimistic outlook, emphasizing that while near-term volatility persists, the medium-term setup for Indian equities is improving meaningfully.

NBFCs remain in play, but private banks take priority

On the financial sector, Raheja maintained a selective but constructive stance, particularly within NBFCs, while clearly tilting preference toward private banks.

“We like NBFCs as part of a broader financial services basket, wherein our preference in the current circumstances is clearly towards private banks, especially given how valuations are stacking up out there, and also how they have been sold off over the last almost six months to one year. But NBFCs is a basket that we like. Within that, we either like some of the larger NBFCs who have a fairly large diversified product basket, or we like focused NBFCs with critical size.”

He added that macro inflation and interest rate expectations remain key variables for the sector.

“If you go by the way inflation was going up, there was an expectation of an interest rate hike that would have happened towards the second half of this year, which is not great news for NBFCs who immediately see their cost of funds going up. Within that, the larger NBFCs managed better. But now that we reach a settlement on the West Asia crisis, hopefully as oil is coming off, we see inflation also starting to taper off and the rate hike is deferred, in which case the NBFC story then sort of continues to do well as it has done over the last 6 months to 12 months.”

Autos: selective strength, EVs emerge as structural driver
Autos continue to remain a stock-picking market, with added tailwinds from the accelerating EV transition.

“Autos is a story that was doing well selectively and will continue to do well selectively. Depending on the model rollout for different companies, you should see autos doing well. Of course, the other element that this crisis has clearly brought home is the importance of EVs as a part of your portfolio, and so companies who have a strong EV basket would also do well. So, we continue to remain positive on autos as well as the ancillary pack would benefit from that.”

Macro shift: inflation relief, but structural themes intact
Discussing the broader macro impact of a potential West Asia resolution, Raheja highlighted a shift in inflation and supply chain dynamics, while stressing that deeper structural themes remain unchanged.

“If we look at January, there was a lot of optimism… GST cuts were spurring consumption demand. What happened after that was the whole war with West Asia, and that interrupted that positive sentiment. Now, with a resolution on the West Asian front, you will obviously see oil prices come down. So, one facet of inflation would come into play from a positive note perspective as well as the whole supply chain disruption.”

He added that several long-term themes are now gaining stronger visibility:

“Strategic autonomy is today one of the big themes globally. When we talk about strategic autonomy on the manufacturing side, we are talking about the entire manufacturing sector coming back into prominence, defence coming back into prominence… With inflation coming down, premiumisation of consumption will become another big theme. That would also mean consumption services like hospitality and travel coming back.”

He also pointed to valuations in BFSI as attractive, with potential foreign inflows acting as a trigger.

“Even the slightest hint of foreigners coming back and buying into that should see that sector do well.”

Ethanol push opens long-term opportunity
On the government’s move toward higher ethanol blending, Raheja acknowledged the structural opportunity but cautioned on execution timelines.

“That space should look interesting. However, one has to be a little cognisant that from a sugar perspective, if you see too much diversion happening, sugar is a very sensitive subject with most households. Although the government has allowed up to 100% blending, the whole ecosystem has to be geared for that. It will take its time, but surely it opens up alternate sources of revenue for companies in this sector.”

Data centres, power, and defence: multi-decadal structural plays
Among long-term themes, Raheja highlighted data centres and the broader energy ecosystem as one of the most powerful structural stories.

“The whole move towards granting almost 21-year tax holiday… there is a conversation on almost $100 billion of data centre capex. This is going to drive power and the whole ecosystem around power including renewables. It continues to remain a theme, although it has seen a lot of run-up.”

He added that short-term consolidation is possible, but the long-term direction remains intact.

“You might see stock prices starting to cool off in the short term, but it is a multi-decadal theme, there is no doubt about that.”

Hospitality: strong demand story still intact
On hospitality, Raheja remains upbeat on the long-term demand outlook, driven by structural tourism and capacity constraints.

“Hospitality again to me is a multi-year theme. During any holiday, if you go to any of our well-established hill stations, there is not enough space anywhere. The number of hotels that have been set up, especially in the four-star and five-star category, have been not enough to meet demand.”

He also noted a shift in business models:

“Most players in this segment are now adopting lower capital-based models to grow. So there is a big change that has happened over the last few years, and I see this growth continuing for some time.”

Outlook: second-half recovery in focus
Overall, Raheja’s message points to a market transitioning from macro stress to selective opportunity, with second-half earnings and liquidity likely to shape the next leg of the rally.

While near-term caution remains warranted, the combination of easing crude, stabilizing inflation, and structural domestic themes continues to support a constructive medium-term outlook for Indian equities.