Baroda BNP Paribas Mutual Fund Manager Bets on Utilities, Healthcare, and Consumer Stocks Amid Market Turbulence

West Asia Tensions: Impact on Markets and Economy

Baroda BNP Paribas Mutual Fund Senior Fund Manager Jitendra Sriram expects crude prices to remain higher for longer, potentially shaving off 20-30bps off GDP growth if strong crude prices continue for 3 months.

Key sectors such as utilities (domestic oriented, with expectations of a warmer summer), healthcare, and parts of consumer are likely to perform well in this scenario. Strong crude prices may lead to a slower global growth, marginally elevated inflation expectations, and weaker earnings growth.

Near-term markets face more headwinds than tailwinds, with expectations of policy easing into CY2026 needing to be tempered if CPI moves above the RBI median target of 4%. Q4FY26 may not see material impacts on corporate earnings due to inventory in the system, but an elongated conflict could impact EPS growth by a few percentage points.

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Geopolitical tensions are likely to persist in FY27, with the new normal for crude prices potentially being $15-20 per barrel higher than earlier. Q4 earnings may see limited impacts from the ongoing Middle East crisis, with a continuation leading to second-order impacts affecting a larger proportion of industry.

Key Challenges for FY27

• Strong crude prices shaving off 20-30bps off GDP growth
• Expectations of policy easing into CY2026 needing to be tempered
• Potential for weaker earnings growth due to slower global growth and marginally elevated inflation expectations

Recommendations

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• Utilities (domestic oriented, with expectations of a warmer summer)
• Healthcare
• Parts of consumer