CIO warns prolonged oil price spikes as key risk for Indian equities
Harshad Patwardhan, Union AMC's chief investment officer, says high oil prices remain a major risk and advises under-exposed investors to increase equity exposure gradually via a 6-12 month systematic plan.
In an email exchange with Abhishek Kumar, Harshad Patwardhan highlighted that the ongoing West Asia war has pushed crude to around $110 per barrel, a level he sees as insufficiently reflected in market pricing and therefore a key risk. Using a probabilistic framework, his team is overweight sectors driven by domestic demand—consumer discretionary, certain capital goods, financials and healthcare—while underweighting fast-moving consumer goods, energy and materials due to weaker earnings visibility.
Patwardhan expects Indian corporate earnings to grow in the mid-teens over the next couple of years, buoyed by consumption trends, early private-sector capex and better export opportunities. He remains constructive on equities, citing reasonable valuations and the prospect of improved foreign portfolio investor flows, but cautions against trying to time the market precisely. For investors with low equity exposure, he suggests a systematic transfer plan over six to twelve months, adjusting pace if geopolitical tensions ease.
Why it matters
The outlook shapes how investors may allocate to Indian stocks amid lingering oil price and geopolitical uncertainties.
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