Oil Squeezes India Markets; IT Insulated, Banks Split
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- Aggarwal told ET Now that even traditionally defensive sectors are under pressure, saying 'there are very few hiding places as of now' amid high market uncertainty.
- Indian consumers have been partially shielded because petrol and diesel prices have not yet been raised to reflect global crude levels, but Aggarwal warned that once retail fuel prices adjust, ripple effects will hit household budgets, transportation costs, and manufacturing input prices.
- Gas-feedstock sectors — including tile manufacturers, QSRs, and processed food producers — face limited ability to switch energy sources, with feedstock prices over the next one to two months expected to be materially higher than a month ago, compressing margins.
- HDFC Bank's sharp decline is partly structural — elevated loan-to-deposit ratios and slowing growth predated the current crisis — and Aggarwal said the stock around the 800-level offers attractive risk-reward, while ICICI Bank and Kotak Mahindra Bank 'look reasonably good.'
- The Nifty IT index has shed over three percent in recent sessions, but Aggarwal views IT as a near-term relative outperformer because it is less exposed to input cost shocks or domestic demand disruption, with Accenture's recent commentary suggesting Q4 numbers may hold up better than feared.
- Foreign institutional outflow is driven not just by US 10-year yields above four percent making dollar assets attractive, but also by a depreciating rupee, India's elevated valuation relative to its 15-year average, and a genuine growth risk if the conflict extends.
- SIP inflows have sustained domestic institutional buying and given markets some floor, but Aggarwal cautioned that this support is not unconditional and could moderate if the selloff deepens.
Why it matters: The financial-market selloff is already visible, but the real damage — to consumer budgets, transportation costs, and manufacturing margins — hasn't started flowing yet because retail fuel prices remain artificially suppressed. Once that buffer lifts, sectors locked into gas feedstock (tiles, QSRs, processed food) face margin compression they cannot pass through quickly, while IT and select private banks like ICICI and Kotak offer relative shelter.
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