Highlights
- Very difficult to make sense of markets right now, says Murarka
- Murarka outlined his preferred investment strategy amid the correction.
- He acknowledged that rising crude prices pose a significant challenge for India.
Amid sharp volatility in global markets driven by rising oil prices, geopolitical tensions, and fluctuations in commodities like gold, investors are grappling with uncertainty. In this backdrop, Founder & CIO @ Renaissance Investment Managers Pankaj Murarka has advised investors to remain calm and focus on long-term opportunities rather than reacting to short-term disruptions.
Very difficult to make sense of markets right now – Murarka
Speaking on the current market environment exclusively on ET Now, Murarka has highlighted the unprecedented pace of change in global developments.
“It’s very difficult to make sense of these markets and what’s happening in the world on an everyday basis. Things are changing on an hourly basis,” he said.
He pointed out that unpredictable policy decisions and evolving geopolitical scenarios are making near-term forecasting extremely challenging.
Oil shock is a headwind for India
Murarka acknowledged that rising crude prices pose a significant challenge for India.
“Oil price is an energy shock to India… even if the war stops, prices will likely settle higher than pre-crisis levels,” he noted.
According to him, if crude stabilises around USD 80–85 per barrel, the impact could be about USD 40 billion—roughly 1 per cent of India’s GDP. However, any spike towards USD 100 or USD 120 could worsen the situation further.
India’s strong fundamentals offer a cushion
Despite global headwinds, Murarka remained optimistic about India’s resilience.
“India’s macroeconomic fundamentals are very strong… the medium- and long-term growth story remains intact,” he said.
He emphasised that India’s large domestic economy acts as a buffer against external shocks, making it one of the few economies capable of weathering global turbulence.
Correction creates long-term buying opportunity
Markets have seen a steep correction over the past few weeks, making valuations more attractive.
“For long-term investors, this becomes a great opportunity… don’t get swayed by short-term volatility,” Murarka advised.
He explained that markets typically price in short-term earnings pressures, while long-term prospects of businesses often remain strong.
Earnings growth may stay subdued
Murarka cautioned that rising oil prices could weigh on corporate earnings.
- Current earnings growth: 6–7 per cent
- Earlier expectations for next year: 12–13 per cent
Revised outlook: Likely single-digit growth
“The first half of next year could remain headwinded as companies take time to pass on higher costs,” he said.
Valuations near historical averages
On market valuations, Murarka said the downside appears limited.
“Markets are close to their mean valuation of 20–21 times forward earnings… any improvement could act as a positive trigger.”
While India trades at a premium to other emerging markets, he said this is justified.
“India has always traded at a premium… it remains the only secular growth story among emerging markets.”
Sectoral bets: Financials, Consumption, IT
Murarka outlined his preferred investment strategy amid the correction:
- Financials: Strong asset quality and attractive valuations
- Domestic sectors (autos, consumption): Likely beneficiaries of recovery and potential stimulus
- IT sector: Attractive after correction, with AI seen as a growth enabler
“IT valuations have corrected to levels seen during the 2008 crisis… there is immense value for medium-term investors,” he said.
Cautious on Gold after sharp rally
On commodities, Murarka expressed caution, particularly on gold.
“Gold delivered nearly 60 per cent returns last year… that reflects high speculation. I would not be a buyer at these levels,” he said, adding that prices may correct further as speculative flows unwind.
Bullish on banking, especially large banks
Murarka remains particularly optimistic about the banking sector, including HDFC Bank.
“We are seeing the healthiest asset quality in decades… large banks are well-positioned to gain market share,” he noted.
He believes India’s growth trajectory could lead to the emergence of global-scale banks over the next decade.
Summing up his outlook, Murarka urged investors to maintain discipline.
“This crisis will also pass… for long-term investors, this is a time to stay invested and use volatility as an opportunity.”
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
