Nikunj Saraf, CEO at Choice Wealth, says that the has tempered earnings growth expectations for FY27 to 8-9% from 13-14% pre-conflict. At the sector level, aviation is the clearest casualty — Indian airlines are expected to post net losses of ₹170-180 billion for FY26, he said. However, he finds the market ripe for buying the dip but in a staggered manner, as the bottom might not be in place yet, according to the expert.
He also shared his philosophy on the right way to build a stock market portfolio, as holding different mutual funds doesn’t guarantee diversification, according to Saraf. Edited excerpts:
How has the Middle East conflict impacted your Nifty 50 target?
The conflict forced a real rethink across the Street. The and Midcap indices corrected nearly 9% since the escalation began, while small caps shed around 8%. Most year-end targets, which were set in the 28,000-29,000 range entering 2026, have been trimmed meaningfully, with the revised consensus now clustering around 27,000 — implying a target multiple closer to 19x forward earnings rather than the 20-21x the market commanded before the war.
Now here’s what matters for investors sitting on cash today. The Nifty is currently trading at a trailing P/E of around 20x, which sits in roughly the 6th-7th percentile of its five-year range — cheaper than it has been for most of the last few years, but not yet screaming value. With Brent having corrected to around $96-97 per barrel on ceasefire news, some of the worst-case earnings scenarios are being unwound. Near-term uncertainties may keep markets range-bound, but if crude stabilises and the ceasefire holds, the macro setup supports a meaningful recovery in the second half of 2026. This is not a moment for blanket conservatism — it’s a moment for selective, staggered entry with a clear 12-month horizon.
Oil prices pose risks to Indian sectors. How has the conflict impacted your estimates for FY27?
India’s structural vulnerability here is hard to overstate. India imports nearly 85% of its crude — roughly 4.2 million barrels per day — and even a few dollars’ rise materially affects the country’s energy economics. When , the damage was systemic. With Brent now around $96-97, some pressure has eased, but the scars on FY27 estimates are already visible.
Pre-conflict, the market was pricing in 13-14% growth for FY27. Those numbers have since been revised down sharply to the 8-9% range, and even that assumes crude doesn’t climb back toward its recent highs. The mechanism is straightforward — every $10 rise in crude above $90 per barrel shaves roughly 2-3% off Nifty earnings, and beyond $120 the damage becomes non-linear as inflation, rupee weakness, logistics costs, and demand destruction all hit at once. On the macro side, India’s FY27 GDP growth forecast has been cut from around 6.8% to 6.0-6.5% across most agencies, directly attributable to the oil shock.
At the sector level, aviation is the clearest casualty — are expected to post net losses of ₹170-180 billion for FY26, with ATF prices having surged over 85% in the region during March 2026 alone. The oil marketing companies are caught in a classic squeeze between elevated crude and politically anchored retail prices. If crude stabilises in the $90-100 range, the broader FY27 earnings story remains intact. But every month of elevated prices chips away at that buffer.
Is this the time to “buy the dip”?
Yes — but with deliberate structure, not with conviction that the bottom is in. The historical playbook is instructive here. During the of February 2022, the Nifty fell about 11% on aggressive FII selling — yet Auto, Metals, and Financials recovered 45%, 35%, and 30% respectively over the following three months. Geopolitical corrections in Indian markets have historically been sharp and short-lived once the trigger eases, and the pattern so far rhymes closely with that episode.
At the same time, in March 2026 exceeded $10 billion — the kind of institutional selling that creates its own downward momentum, and another couple of percentage points of downside cannot be fully ruled out. The honest answer is that nobody catches the exact bottom, and trying to is expensive. The smarter approach is deploying capital in 3-4 tranches over the next quarter, increasing SIP amounts right now when more units are being bought at lower prices, and focusing on sectors where earnings resilience is visible regardless of crude — financials, defence, metals. Patience plus process beats timing every time.
What does the ideal portfolio look like in the current setup?
The word “diversified” gets thrown around loosely, but right now it actually means something specific. Most retail investors holding multiple Indian equity mutual funds are essentially running concentrated single-country, single-currency exposure — that’s not diversification, it’s repetition with different labels. The ideal portfolio in this setup has three genuine pillars.
In Indian equities — roughly 60-70% — the tilt should be away from crude-exposed names like aviation, , and paints, and toward financials, defence, capex plays, and metals. Within this, large caps form the core, but the real opportunity right now lies in accumulating mid and small caps systematically. This segment has corrected sharply — small caps are down about 8% since the conflict escalated — and that’s precisely the kind of entry window that rewards patient, staggered buying rather than lump-sum aggression. SIPs and STPs into quality mid and small-cap funds make more sense here than timing individual names.
together deserve a 10% allocation — not as a speculative trade but as a structural hedge. In a world where the rupee is under pressure and geopolitical uncertainty has no clean resolution date, precious metals serve a dual purpose: they protect against currency erosion and tend to move independently of equity markets, smoothing out portfolio volatility when it matters most.
For international equities, a 20% allocation completes the genuine diversification that most Indian portfolios lack. The S&P 500 has delivered around 18-19% annualised returns in rupee terms over the past decade versus 13-15% for the Nifty 500 — meaning investors who added global exposure didn’t sacrifice returns, they improved them. Beyond returns, global markets offer access to semiconductor, AI infrastructure, aerospace, and large-cap biotech — sectors that simply don’t exist at scale on Indian exchanges. US-focused ETFs or feeder funds are the cleaner route, especially from a tax treatment standpoint compared to FOF structures under LRS.
The remaining 10% should sit in short-duration debt — not as a permanent fixture but as dry powder. In a volatile macro environment, having liquid capital ready to deploy when sharper dislocations emerge is itself a return-generating strategy. The portfolio that survives volatility intact is the one that can also exploit it.
Which sectors offer scope ahead, and what should investors steer clear of?
The clearest structural winners in this environment are defence, financials, consumption and metals. Based on how similar geopolitical cycles have played out historically, Financials, Metals, and Autos tend to lead the recovery phase — and the current setup mirrors that template closely. Defence is not a trade here, it’s a multi-year policy story — DAC approvals worth ₹79,000-1,05,000 crore have already been cleared, ammunition indigenisation has reached about 91%, and the conflict itself has only accelerated the government’s urgency around energy and defence self-sufficiency.
In metals, the Middle East accounts for around 8% of global aluminium production, so any sustained supply disruption lifts LME aluminium prices and directly benefits primary Indian producers. Domestic steel profitability is also improving meaningfully off December 2025 lows.
On the avoid list — OMCs remain structurally uncomfortable as long as crude stays elevated and retail prices remain frozen. Aviation is a sector to stay away from until fuel costs stabilise. Paints and chemicals also face significant pressure from crude-linked input costs, and any earnings recovery there requires a benign crude environment that isn’t yet secured.
Are investors right to turn to global markets — and does rupee depreciation add to the return?
The answer is a clear yes, and the data makes it plainly. In 2025, the S&P 500 returned about 17.9% in dollar terms versus roughly 10.5% for the Nifty, and with the rupee weakening about 5% against the dollar, Indian investors holding US assets earned over 20% in rupee terms — well ahead of domestic equity returns. Rupee depreciation, which tends to accelerate during geopolitical stress, effectively adds a return kicker to dollar-denominated assets. So currency movement here is not just a risk to hedge — it is itself a source of additional return.
Beyond returns, there’s the access argument. Global markets offer meaningful exposure to large-scale semiconductor, AI infrastructure, aerospace, and biotech companies — sectors that simply don’t exist at scale on Indian exchanges. For most Indian investors with a serious long-term portfolio, 20-35% in international markets is a reasonable target — early-stage investors starting at 20%, mature portfolios moving toward 30-35% for genuine diversification. Execution matters, though — FOF routes under LRS carry additional tax layers, so larger investors are better served by direct international ETFs with cleaner redemption treatment. The strategy is sound, but how you access it matters as much as the idea itself.
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.