Expert View: Inderbir Singh Jolly, CEO, PL Private Wealth, believes that crude oil remains the most important macro variable for the Indian stock market. He believes that elevated crude oil prices, geopolitical uncertainty, slowing global growth expectations and rising inflation risks have created a less accommodative backdrop for earnings and valuations. Therefore, a broad-based runaway rally that markets experienced during earlier liquidity-driven phases is unlikely this year. Edited excerpts:
How has the current stock market turmoil affected your investment strategy?
The recent phase of has reinforced our preference for disciplined asset allocation, quality leadership and domestic resilience rather than aggressive momentum participation. While Indian equities have recovered meaningfully from the recent correction, the market environment continues to reflect selective risk-taking rather than broad-based optimism.
At the broader market level, we believe valuation comfort has improved meaningfully compared to the excesses seen over the last few years, although pockets of speculative continue to trade ahead of fundamentals. As a result, we currently prefer selective accumulation over broad market aggression. The market is likely to remain highly sensitive to crude oil prices, inflation trends, monsoon progression and geopolitical developments over the near term.
In this environment, we continue to prefer quality large-cap, flexi-cap and balanced advantage strategies, while selectively increasing exposure to sectors aligned with India’s long-term domestic capex, infrastructure and manufacturing-led growth cycle.
What does the right asset allocation look like amid high market volatility?
From an asset allocation perspective, we continue to maintain a balanced and diversified approach across equities, fixed income and strategic alternatives.
Within equities, allocation remains tilted toward quality and strategies with stronger earnings visibility and balance-sheet resilience. For conservative and moderate-risk investors, Market Linked Debentures (MLDs) can serve as an efficient way to participate in equity market upside while offering a degree of capital protection and better downside management during periods of elevated volatility.
In fixed income, the current interest-rate environment and supportive liquidity conditions continue to make high-quality duration-oriented debt strategies increasingly attractive, particularly across sovereign and AAA segments, while shorter-duration accrual strategies continue to offer reasonable risk-adjusted returns. For clients with higher risk appetite, we suggest adding select structured debt strategies across AIFs & NCDs to improve portfolio returns.
We also continue to maintain a strategic allocation to gold as a portfolio diversifier and hedge against geopolitical uncertainty, currency volatility and inflationary risks. While may remain volatile in the near term, its role as a long-term portfolio stabiliser remains important in the current macro environment.
Given the ongoing and the broader uncertainty around global currencies, global allocation is increasingly becoming an important component of portfolio diversification for Indian investors rather than a purely tactical opportunity. Historically, Indian portfolios have remained heavily domestic-oriented, but the current macro environment reinforces the importance of owning select international assets as a hedge against currency depreciation, geopolitical risks and concentration in a single economy.
How do you see crude oil prices impacting markets going ahead as the war enters its third month?
Crude oil remains the single most important macro variable for India in the current environment. India imports nearly 85% of its crude oil requirements, and the recent spike in Brent crude prices materially increases risks around inflation, fiscal balances and the current account deficit.
The Strait of Hormuz continues to remain a critical global chokepoint, accounting for nearly 20% of global crude shipments. Any prolonged disruption in the region could sustain elevated energy prices for longer than markets currently expect. In addition, higher freight, insurance and shipping costs are already beginning to feed into broader imported inflation.
For India, the incremental import burden from current crude price levels could exceed $70 billion annually. Historically, RBI estimates suggest that every 10% increase in can add roughly 30 basis points to inflation and reduce GDP growth by approximately 15 basis points if fully passed through.
While the government has temporarily cushioned some of the impact through excise duty reductions and calibrated retail fuel pricing, second-order effects are likely to emerge gradually across transportation, manufacturing and consumer spending.
From a market perspective, elevated crude prices create a more challenging backdrop for sectors dependent on discretionary consumption, global demand or input-cost-sensitive manufacturing. They also reduce the probability of aggressive monetary easing by the RBI. The central bank has already maintained a cautious stance with the repo rate unchanged at 5.25%, while inflation risks linked to energy prices and monsoon uncertainty continue to rise.
That said, the impact today is structurally lower than during previous oil shocks because India’s oil and gas imports as a percentage of GDP have declined meaningfully over the past decade. Domestic demand conditions also remain relatively stable, supported by infrastructure spending, private consumption and strong domestic liquidity. Overall, the market environment is likely to remain highly sensitive to developments in crude oil prices, currency movements and geopolitical headlines over the next few quarters.
What is your view on the index — flat-to-negative for 10-12 months, or is a runaway rally possible?
Our base case remains constructive but measured rather than aggressively bullish. We currently maintain a 12-month NIFTY target of 27,080, derived using a 17.5x multiple — representing a 10% discount to the long-term average valuation — on our FY28 EPS estimate of ₹1,551. This implies moderate upside from current levels, but not the kind of broad-based runaway rally that markets experienced during earlier liquidity-driven phases.
The key reason is that the macro environment today is materially more complex. Elevated crude oil prices, geopolitical uncertainty, slowing global growth expectations and rising inflation risks create a less accommodative backdrop for earnings and valuations. While India’s structural domestic story remains intact, earnings growth expectations may gradually normalise after the exceptionally strong post-pandemic recovery cycle.
Our current estimates assume CAGR of roughly 15% over FY26-28, although we remain somewhat below Street expectations. If geopolitical tensions prolong further or crude prices remain elevated for an extended period, consensus earnings estimates are likely to see additional downward revisions.
From a valuation perspective, however, markets are no longer trading at excessive levels. NIFTY is currently at a meaningful discount to long-term average valuations, which reduces the probability of a deep structural correction unless there is a severe deterioration in global conditions.
In our bull-case scenario, a faster normalisation in geopolitics, moderation in crude oil prices and improved global risk sentiment could drive a re-rating toward historical average multiples, potentially taking NIFTY closer to 30,000 levels. Conversely, the bear-case scenario would involve sustained geopolitical escalation, sharper inflationary pressures and global growth deterioration, which could compress valuations toward crisis-period levels.
Gold prices have been on a tear. For someone who missed the rally, does entering now make sense?
The long-term structural case for gold remains intact. Elevated geopolitical uncertainty, central bank diversification away from reserves, persistent macro volatility and concerns around global fiscal sustainability continue to support strategic demand for gold globally.
In the current environment, gold also serves as an important hedge against inflation, currency depreciation and geopolitical tail risks — all of which remain relevant given elevated crude oil prices and global macro uncertainty.
However, after the sharp rally witnessed over the past year, near-term positioning has become more sentiment-driven. Any meaningful de-escalation in geopolitical tensions or moderation in energy prices could trigger periods of consolidation or short-term corrections in gold prices.
For investors who have missed the recent move, we would avoid aggressive lump-sum positioning purely from a momentum perspective. Instead, gold should continue to be treated as a strategic portfolio diversifier rather than a tactical trade.
A staggered or systematic allocation approach remains more appropriate at current levels. From an asset-allocation standpoint, maintaining roughly 10-15% exposure to gold within a diversified financial portfolio continues to make sense for long-term portfolio resilience.
Which sector will be in the limelight in 6-12 months, and which should investors avoid?
We continue to prefer sectors linked to domestic capex, infrastructure creation, manufacturing expansion and financialization.
Capital Goods, Infrastructure and remain among the strongest structural themes. Order inflows continue to remain robust across power transmission, smart infrastructure, renewables, railways and data centres. Defence manufacturing is benefiting from increasing indigenisation, higher procurement visibility and geopolitical prioritisation of strategic domestic capabilities.
Financials and Banks also remain well-positioned, supported by healthy credit growth, improving asset quality and stable balance sheets. Large private sector banks continue to remain preferred given their stronger liability franchises and ability to navigate changing interest-rate conditions.
Telecom continues to benefit from rising data consumption, improving tariff structures, industry consolidation and increasing cash-flow visibility. Similarly, Healthcare — particularly hospitals — continues to witness strong occupancy trends, improving realisations, and healthy earnings visibility.
Power and Utilities also remain constructive beneficiaries of rising electricity demand, transmission expansion and broader infrastructure-led industrial activity.
Selective Metals may continue to benefit from infrastructure-linked demand recovery and stronger domestic industrial activity, although the sector remains sensitive to global commodity cycles.
On the other hand, we remain relatively cautious on IT Services, Chemicals, Cement and certain export-oriented segments.
continues to face weaker global demand visibility, pricing pressure, slower discretionary technology spending and uncertainty linked to AI-led disruption. Chemicals remain impacted by weak global demand conditions, pricing pressure and supply-chain disruptions.
Cement faces rising energy and freight costs, which could pressure margins despite healthy infrastructure demand. also remains vulnerable to policy interventions, crude volatility and refining-margin fluctuations.
Overall, we believe the market leadership over the next 6-12 months is likely to remain concentrated in domestic cyclicals and infrastructure-linked themes rather than globally sensitive sectors.
What shift in behaviour have you seen in HNI investors recently, and how do they react to headline movements versus retail investors?
One of the most important structural changes over the last few years has been the increasing sophistication and direct market participation among HNI investors.
Traditionally, in India were concentrated toward real estate, fixed income and mutual funds. However, the combination of financialization, digital access, PMS and AIF proliferation, and greater market awareness has led to a meaningful increase in direct equity ownership (both listed and unlisted) and active sector positioning.
Interestingly, behavioural differences between HNIs and retail investors have narrowed over time, although the nature of their reactions still differs.
Retail investors typically react more emotionally to short-term market volatility — often reducing exposure during sharp corrections and increasing allocations during strong momentum phases. HNIs, on the other hand, tend to respond more through delayed deployment behaviour. They are generally less likely to panic-sell aggressively, but often wait for greater macro clarity before deploying meaningful incremental capital during volatile phases.
The current environment reflects this divergence quite clearly. Foreign institutional investors have remained persistent sellers amid global uncertainty, while domestic institutional flows — particularly SIP-driven retail money — have continued to provide an important stabilising force for Indian markets.
At the same time, many HNI investors continue to maintain relatively elevated cash positions while waiting for greater visibility around crude oil, geopolitics and earnings.
Historically, however, periods where HNI participation remains cautious despite improving domestic liquidity have often created attractive medium-term opportunities, particularly within quality mid-cap and domestic cyclical businesses.
Does real alpha lie in stock picking rather than index investing?
India continues to remain one of the few large markets where active stock selection can still generate meaningful alpha over longer periods.
The dispersion in earnings growth, capital efficiency and balance-sheet quality across sectors and companies remains substantial, particularly outside the top-tier large-cap universe. This creates opportunities for disciplined bottom-up research and selective allocation.
Our own model portfolio has outperformed the broader market meaningfully over the long term, reflecting the benefits of active sector rotation and stock selection. Since November 2018, the model portfolio has delivered returns of approximately 147.5% versus nearly 123.5% for .
The case for stock picking in India is strengthened by several structural factors.
- First, India remains a relatively under-penetrated research market in the broader mid-cap and small-cap universe, allowing high-quality businesses to remain mispriced for longer periods.
- Second, sectoral dispersion remains very high in the current macro environment. Domestic cyclicals, infrastructure-linked sectors and financials continue to show strong earnings resilience, while export-oriented and globally sensitive sectors face a more challenging backdrop.
- Third, index composition itself creates certain limitations. Passive exposure inevitably allocates capital toward sectors and companies irrespective of relative earnings quality or macro positioning.
That said, the alpha environment is gradually becoming more competitive as institutional participation deepens and information dissemination improves. As a result, generating sustainable alpha increasingly requires deeper sector specialisation, strong management evaluation and disciplined valuation frameworks rather than broad macro positioning alone.
For most investors, the optimal approach is not necessarily active versus passive in isolation, but rather a balanced framework combining core index exposure with selective actively managed allocations focused on high-quality businesses and long-term structural themes.
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.