Patel said oil prices may not fall below $80-$85 per barrel even if a peace agreement is reached soon, as production normalisation across key oil-producing regions could take several months. He expects the current environment to favour select gas companies while posing challenges for oil marketing companies (OMCs).
According to Patel, global oil inventories have fallen by about 20%, while disruptions around the Strait of Hormuz continue to impact supply. Although China has reduced crude imports by drawing from strategic reserves, supply shortages remain a concern as demand rises during the peak driving season in the United States.
He also pointed to production disruptions in parts of West Asia. Forced shutdowns of oil wells in countries such as Kuwait, Iraq and Iran could delay a return to normal supply levels even after geopolitical tensions ease.
Within the energy sector, Equirus prefers gas-focused companies over OMCs. Patel said he remains underweight on OMCs due to concerns around profitability in a high crude price environment.
Among its preferred picks, Equirus likes GAIL and Gujarat Gas. Patel said Gujarat Gas has benefited from higher demand from the Morbi ceramic cluster as propane availability has declined, leading manufacturers to switch to natural gas.
Patel expects inflationary pressures to remain elevated during the second half of the financial year due to higher fuel prices and forecasts of a below-average monsoon. As a result, he sees limited room for interest-rate cuts and expects the possibility of one or two rate hikes later in the year.
Patel believes Indian markets could remain range-bound in the near term. He noted that India’s recent underperformance relative to some emerging markets has been driven by investor preference for artificial intelligence and commodity-linked themes globally.
However, he expects broader market participation to improve if commodity prices ease or global enthusiasm around AI-related trades moderates. Patel also sees better earnings momentum outside the benchmark indices.
According to Equirus, stronger earnings growth in mid-cap and small-cap companies compared with larger benchmark stocks could support relative outperformance in those segments over the coming quarters.
For the full interview, watch the accompanying video
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