Renewables, Defence to Lead FY27: Siddarth Bhamre
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- Siddarth Bhamre, Head of Institutional Research at Asit C. Mehta Investment Intermediate Ltd, identified renewables and defence as the two sectors most likely to attract investor attention in FY27, citing structural tailwinds and policy support
- Indian markets ended FY26 down roughly 5% despite strong domestic liquidity, absorbing three shocks in sequence: Trump's tariff announcements, the emergence of AI as a threat to the Indian IT sector, and the West Asia war in the final month of the fiscal year
- Gas distribution companies and large infrastructure players corrected sharply due to Middle East dependency, but Bhamre flagged them as high-risk, high-reward portfolio additions that could snap back to pre-war revenue levels once conditions normalise
- Rupee stabilisation against the dollar is a prerequisite for restoring foreign investor confidence, with FII flows likely to improve only in the second half of FY27 as currency, earnings and geopolitical factors reverse together
- Gold and silver posted extraordinary returns over the past year but have seen volatility spike sharply in the last two months; Bhamre said those without exposure are "more than a year late in gold and a couple of quarters late in silver"
- Domestic inflows are unlikely to rise meaningfully in FY27 because two-to-three-year returns have disappointed retail investors, and continued correction could trigger outright exits
- India's relative valuation versus global peers has improved on price but will erode as Q4FY26 earnings are hit and Q1FY27 estimates face significant downward revisions, according to Bhamre
Why it matters: The FY27 playbook splits in two: renewables and defence ride structural tailwinds regardless of geopolitics, while gas distribution and infrastructure are pure call options on a quick West Asia resolution — the longer the conflict drags, the deeper their earnings damage. With Q4FY26 and Q1FY27 earnings already at risk of downward revisions and FII selling unlikely to reverse until H2, near-term Indian market direction hinges on rupee stability and how soon energy prices ease.
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