- Indian equity markets may test Nifty 50 at 23,000 amid ongoing volatility and global concerns
- Rising Brent crude above $95 impacts market sentiment due to West Asia tensions and oil dependence
- Earnings recovery in Q1FY27 needs sustainment amid inflation risks from monsoon and fertilizer issues
The Indian equity markets should brace for continued volatility, with the benchmark Nifty 50 index potentially testing the 23,000 levels once again, according to market expert Manishi Raychaudhari, CEO of Emmer Capital Partners. In an exclusive interview with NDTV Profit on Thursday, July 23, Raychaudhari outlined the current complex macroeconomic environment where global tech jitters, energy price spikes, and domestic inflation risks are converging to test investor resilience.
The cautious sentiment comes as the Houthi's aggressive entry into the Iran-US conflict is aggravating the West Asia crisis and pushing Brent crude prices higher. Houthis attacked Saudi Arabian tankers in the Red Sea. When Brent crude trades above $95, it is bound to have sentimental impact on the Indian market, according to most market analysts.
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India's vulnerability to high oil price is becoming a macro concern. From the market perspective, the negative sentiment will weigh on stocks and keep prices largely subdued. Hence, market experts argue that this will give opportunities to long-term investors to slowly accumulate high quality stocks in growth segments, now available at attractive valuations. Banking stocks appear attractively valued, particularly in the context of high credit growth and very low NPAs.
Earnings and Inflation Threat
On the domestic front, the focus remains firmly on corporate performance. While there were signs of an earnings recovery in the first quarter of fiscal 2026-27 (Q1FY27), Emmer Caital's Raychaudhari emphasized that the recovery needs to sustain its momentum in the upcoming quarters to justify current market valuations. However, brokerages expect the recovery to be subdued.
However, domestic macroeconomic headwinds persist, particularly regarding inflation. He cautioned that the combination of uneven monsoon distribution and constraints in fertiliser supply will likely fuel food inflation in the near term. This poses a distinct challenge for rural demand recovery and could complicate the central bank's trajectory on interest rates.
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Sectoral Outlook: Private Banks Over PSUs
Despite the broader market anxieties, Raychaudhari pointed out clear rotational opportunities within specific sectors. Delving into the financial space, he expects a significant shift in banking sector dynamics, projecting that private sector banks will likely gain market share at the expense of public sector banks. This anticipated shift suggests that investors might find a more favorable risk-reward ratio in top-tier private lenders as they capitalize on credit growth and operational efficiencies.
Global Headwinds and Tech Jitters
On the broader global sentiment, Raychaudhari noted that investors are currently struggling to move on from AI-led anxiety. After a massive, tech-heavy rally driven by artificial intelligence optimism, the market is now grappling with concerns over stretched valuations and the timeline for actual AI monetization. Compounding the global tech worries is the ongoing surge in energy costs. he warned that higher energy prices are hitting markets disproportionately, squeezing corporate margins and dampening risk appetite, particularly for emerging market equities.
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