Oil at $100, Rupee Down 9%: Lokapriya's Caution
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- Chakri Lokapriya, CIO-Equities at LGT Wealth, told ET Now investors should "stay away or incrementally buy" with oil hovering around $100, arguing that lower prices alone do not make stocks compelling in the current environment.
- The Indian rupee has depreciated 8-9% over the past year, and Lokapriya said this — combined with surging shipping, freight, and oil costs — is pulling down one-year growth estimates, justifying the lower valuations now seen in the market.
- Input costs in petchem, agro, urea, oil-to-chemicals, tyres, paints, and pipe companies have risen 50-60% in under a month; Lokapriya noted the impact will hit margins starting next quarter, since the current quarter's inventory was already bought.
- Banking and consumer staples — typically defensive — face "collateral damage" too, with Lokapriya citing lower credit growth from weaker activity and higher input costs eroding staples' usual low-risk status.
- L&T, auto exporters, and VA Tech Wabag all have attractive valuations, but Lokapriya flagged that L&T's Middle East order book, auto export exposure, and Wabag's medium-term growth assumptions remain vulnerable to the conflict.
- InterGlobe Aviation earnings are likely to be cut beyond the current quarter if airlines fully pass on higher fuel costs, with Lokapriya noting fuel makes up 30-40% of costs and warning demand could weaken as fares rise.
- The government is currently absorbing the crude surge by holding retail fuel prices, leaving refiners to take the hit — but Lokapriya warned inflation will eventually surface at the pump and across the economy.
Why it matters: Lokapriya's caution spans both cyclicals and defensives, with input costs up 50-60% in weeks and the rupee down 8-9% — eroding the traditional refuge in staples and banks. For investors eyeing beaten-down names like InterGlobe, L&T, and VA Tech Wabag, his message is that the growth reset hasn't finished, making incremental entries safer than going all in.
