Muted IPO action seen this week as only one public issue sch...
20 Apr 2026
Asked whether it is time for foreign portfolio investors to return to Indian equity markets, Ramanathan reply was: “…we believe Indian equity markets are now reasonable as regards valuations and are poised to benefit from a diversified economy and domestic market. We expect foreign investor sentiment to improve once oil prices settle down.” He manages some ₹9,800 crore equity assets under management at JM Financial AMC.
Do you think our markets have seen the worst from the impact of the Iran war?
In March, Indian equity markets declined nearly 11% on fears of the fallout from the Iran war. Concerns about oil and gas availability were elevated and prices spiked, leading to a weakness in the currency. The subsequent news flow has been encouraging as tensions between US and Iran seem to have declined. However, we will need to assess markets and the impact on the economy on a periodic basis.
India remains particularly vulnerable, as dollar remittances and energy dependency on the Middle East is high. So far, India seems to have coped with the crisis relatively well with minor dislocations, but higher prices of crude may trickle into the economy and cause inflationary pressures.
The estimate of crude prices by the RBI at $85 /bbl is higher than the pre-war estimate of $65 for 2026. Its impact?
Oil prices may not move back to pre-war levels quickly, but in the early stage of the conflict, availability and price were issues; we seem to have addressed the availability aspect. However, the second order impact needs to be seen… many chemical industries have been impacted and fertiliser prices have increased. The impact on fiscal and current account balance needs continuous monitoring.
The consensus earnings estimate still points to a double-digit growth, albeit at a lower level than the previous quarter. The impact of higher energy prices and input costs may be sporadic and based on the particular industry and company that we are discussing. Leading companies may emerge better in this crisis due to their superior pricing power, both on inputs and selling practices. In general, almost all companies may benefit when inventories get re-priced upwards. We may witness earnings being better than expectations due to better pricing and inventory gains.
As regards cost of funds, it is premature to expect interest rates to increase… given that inflation is benign. As regards Corporate India, we maintain that the balance sheet leverage is low and higher interest costs may not impact the bottomline significantly.
You're optimistic on the March quarter earnings then?
[Earnings growth] may not be a significant factor for markets to be disappointed. It is too early to discuss sectors and company impact. Our base case assumption is that the impact may be uneven and last for a few quarters as the disruption in availability and prices of key raw materials stabilise. That said, earnings volatility in such an environment is to be expected and not be taken too negatively by the market.
In our view, the current war is in continuous state of evolution and its impact on earnings and market sentiments too fluid to take a stand. As regards trade tariffs, we are past the peak pain with the US and we expect gradual recovery in trade coming through. India could eventually benefit in global exports as we have now signed trade treaties with Europe and US and now cover above 70% of global trade.
As a wealth manager, how would you allocate money now between debt, equity, and gold?
This depends on individual risk profile but that said, we would recommend a slightly lower allocation to gold and equity considering the recent volatility. We have a positive bias towards large cap equities given where valuations are and the volatility in the markets. Gold has been one the better performing assets and could take a breather. A higher debt allocation is warranted to maintain liquidity and ride out the volatility. This strategy is subject to change depending on the market conditions.
To your mind, which are the compelling themes for investors? And why?
India’s external energy dependence has created a macro risk and this has created opportunities for investments. We expect newer opportunities to emerge in renewable energy and storage. Manufacturing in India has become competitive due to lower costs of energy and manpower. …we can now be an alternative hub to China from a global derisking point of view. Similarly, industries like chemical, metal-based segment are also expected to do well. Traditional sectors such as pharma, textiles, auto ancillaries and agricultural products may continue to gain ground.
Do you see a structural change in investor mindset in how DIIs absorbed much of the FPI selling?
This has been without doubt the most significant shock absorber of Indian equity markets. Ease of investing in mutual funds and lower cost of transaction have enabled a greater pool of saving shift towards equity funds. Barring unforeseen circumstances, we do not expect a reversal of flows. With other investment avenues not having the tax efficiency of equity investments, we expect the trend to continue. Equity flows into our capital market are a necessity to keep India’s investment story alive as the government cannot do all of the heavy lifting when it comes to investments.
FPIs still perceive India to be expensive…
This phase was certainly the issue last year and the beginning of this year but now, we believe Indian equity markets are now reasonable as regards valuations and are poised to benefit from a diversified economy and domestic market. We expect foreign investor sentiment to improve once oil prices settle down. This trade could quickly reverse as well and India is one of the bigger beneficiaries should the global environment settle down. If the tax restriction is removed for foreign portfolio investments, then we could see sustainable increase in allocations. (FPI profits are exempt from capital gains tax in most other markets.)
Ram Sahgal
Ram Sahgal is a deputy editor at Mint. He has over 20 years of experience in journalism, with previous roles at The Intelligent Investor, Bombay Times, The Economic Times, and The New Indian Express. Between his media roles, he briefly worked at a commodities exchange before returning to his true passion, business journalism. Ram graduated in liberal arts from St Xavier’s College, Mumbai, where he studied films, which explains his move to Bombay Times, where he covered the film industry during the rise of Sunny Deol and Sanjay Dutt. He took a leap of faith to transfer to The Economic Times, and thanks to his restless mind, later moved to cover the commodities beat. Over the past three years, Ram has been tracking the stock markets at Mint. His focus areas include writing about market infrastructure institutions, brokerages, derivatives, and related regulations. His hobbies include spotting trains and understanding the locomotives that power them. In his free time, he takes his octogenarian mother out for drives and goes to the cinema with her on weekends. If he has a dream, it is to write a screenplay for a movie. For now, he enjoys viewing market data on NSE and BSE, observing the shifting mood of Mr Market, and conversing with market experts.
