'Buy the dip': Edelweiss AMC CIO says India market selloff may be overdone

Trideep Bhattacharya, CIO-Equities, Edelweiss AMC says India's equity market has already absorbed the worst of the oil shock, with 2026-27 (FY27) earnings at risk by just two to four percent. He expects staggered fuel hikes, a possible FII tax relief signal from the government, and a recovery contingent on oil cooling to $100 by June.

India's stock market has fallen more than the actual economic damage from the West Asia conflict justifies. "Markets have very well factored that in, and the earnings impact in FY27 could be about 2–4%, whereas markets have corrected from peak anywhere between 5–10%," Trideep Bhattacharya, CIO-Equities at Edelweiss AMC, suggesting the gap could create an opportunity.

Rather than sitting on the sidelines, Bhattacharya is using the market weakness to buy stocks that have fallen more than their business performance warrants. "Trying to see in this volatility when some share prices are down more than usual, if you could find some spots which are relatively insulated, and could hold us in good stead in about a year or two from now" — that, he said, is the strategy.

Everything in his outlook rests on one number: oil. If crude falls back to around $100 a barrel by the end of May or early June, the damage will remain manageable, and India will get through the crisis without lasting harm. The rupee, company earnings, foreign investor flows and government spending all follow from where oil goes next.

May 15th ₹3 per litre fuel hike is just the opening move. Bhattacharya estimates the full increase needed is ₹15–20 per litre, and expects more hikes on petrol, diesel and gas over the next 15–20 days — rolled out gradually to soften the blow on consumers.

On foreign investors, his call goes against the grain. Despite heavy FII selling through 2025-26 (FY26), he thinks the government is more likely to offer some tax relief on equities than impose fresh burdens. "If at all, if anything, I would probably expect a little bit on the other side, rather than trying to take further away from equity markets." That said, he is clear that a tax gesture alone will not be enough. "For FIIs to turn positive on India, we will have to see oil prices below $100. At the moment, India is seen as pretty much an anti-oil trade."

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The deadline to watch is June. If oil stays above $100 into July, the government will have little choice but to cut infrastructure spending to control the deficit — and company earnings estimates will start coming down. "If it goes beyond June, goes into July, August, September, the government will have to take measures," he warned. For now, he sees that as a worst-case scenario, not the most likely one.

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