Hemant Sood, Founder and Director at Findoc, describes the current phase as a “structural stress test” driven by three converging forces — oil above $100 per barrel, the rupee weakening to record lows near ₹92.35, and equity market volatility reflected in recent declines in the Nifty 50.
“This is not just short-term noise. It is a deeper macro reset that investors need to read carefully,” Sood said.
Beyond oil: Hidden stress points emerge
While crude prices dominate headlines, Sood pointed to less visible disruptions that could have broader economic consequences.
Natural gas supply constraints are beginning to affect fertiliser production, with companies already reporting reduced allocations. This comes at a critical time ahead of the Kharif sowing season, raising risks to agricultural output and increasing pressure on subsidy costs.
At the same time, rising bitumen prices are feeding into infrastructure costs. Contractors have flagged higher input expenses and delays, indicating that road-focused companies may face margin pressure in the coming quarters.
“These are second-order effects that markets are still underestimating,” Sood noted.
What is driving investor sentiment right now
Foreign investor outflows have added to volatility, with nearly $2 billion pulled from Indian equities in early March, according to Sood. Policy changes such as higher transaction taxes have also contributed to near-term caution.
However, domestic flows continue to act as a counterbalance. Strong participation through systematic investment plans (SIPs) and institutional buying has helped absorb selling pressure, limiting downside risks.
“The role of domestic investors has become structural. That is a key shift in how Indian markets behave during global stress,” he said.
Growth expectations remain positive but uncertain. While earnings are projected to expand in FY27, Sood cautioned that sustained high oil prices could lead to downward revisions, particularly if inflation rises and growth moderates.
How portfolios must be repositioned
In this environment, Sood recommends selective reallocation rather than broad risk-off moves.
Sectors exposed to high crude costs — such as aviation, oil marketing companies and parts of infrastructure — may face near-term pressure. In contrast, domestic-facing sectors like private banks and FMCG, along with export-oriented industries such as IT and pharmaceuticals, are better positioned.
Currency weakness, he added, tends to support IT and pharma earnings, making them effective hedges in current conditions.
Gold is also gaining relevance as a stabiliser. “An allocation of 8–10% to gold can help cushion portfolios during periods of macro stress,” Sood said.
Why long-term discipline still matters
Despite the current uncertainty, Sood emphasised that long-term investing principles remain unchanged.
He highlighted asset allocation as the most critical decision for investors, especially in a cycle marked by volatility in commodities, currencies and interest rates. Reacting to headlines, he warned, often leads to suboptimal outcomes.
“Every crisis feels unique in the moment, but markets have a consistent track record of recovery,” he said.
He also reiterated the case for passive investing in large caps, noting that a majority of actively managed funds fail to beat their benchmarks over time. A balanced approach — combining index exposure with selective active bets in less efficient segments — can help improve outcomes.
What retail investors should focus on
For individual investors, the priority is consistency and preparedness.
Sood advises maintaining SIPs to benefit from rupee-cost averaging, keeping sufficient emergency funds outside the market, and focusing on companies with strong balance sheets and pricing power.
He also sees opportunities emerging from volatility. Continued foreign selling in large-cap stocks, for instance, could create attractive entry points for long-term investors.
“The goal is not to predict every move, but to respond intelligently to what the macro environment is signalling,” he said.
