Daulat Wealth Founder Sees Opportunity in Market Dips, Favors Large Private Banks

Market Update: Expert Predicts Best Time to Buy Amid US-Iran War Uncertainty

Indian stock market expert Varun Fatehpuria, Founder & CEO of Daulat Wealth Management, believes that the current market conditions present a window of opportunity for long-term investors. In an interview with Mint, Fatehpuria shared his views on the market structure, IT, and large private banks, among other things.

The US-Iran war has created uncertainty in the market, with oil prices above $100 per barrel. This has added roughly $13-14 billion to India's annual import bill for every $10 increase. However, the demand picture for oil is weakening due to accelerating EV adoption, plateaued US and China auto sales, and OPEC+ signaling higher output. India is better positioned today than in 2013, with services exports and remittances significantly larger, resulting in a smaller current account gap.

Earnings growth is expected to moderate to high single digits in FY27, with FY26 Nifty EPS growth already modest at around 10%. Corporate balance sheets are strong, with Nifty 50 ex-financials sitting at near-zero net debt and well-positioned to absorb the pain.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Inflation Outlook

Inflation has resurfaced as a concern globally, but it is almost entirely supply-driven, which means it is likely transient. US CPI jumped to 3.3% in March on a record gasoline spike, and the Fed is now split between cutting and hiking. India's CPI is still benign at around 3.4%, but the RBI has flagged FY27 inflation at 4.6% and paused its rate-cutting cycle at 5.25%.

India's macro fundamentals are in far better shape than in any previous crisis, with a fiscal deficit at 4.4%, external debt at 19% of GDP, and bank NPAs at 0.5%. The government has also acted proactively, cutting excise duties and creating a stabilisation fund.

Market Outlook

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Despite the uncertainty, Fatehpuria believes that this is the best time to be a buyer. The Nifty's trailing PE has fallen below 20 times on Q4FY26 estimates, which is at or below its long-period average of 18.9 times. The top 10 stocks in the Nifty are at their 17th percentile of historical valuations — levels last seen in 2016 and 2020. The bond yield to earnings yield gap is just 1%, which is an attractive zone for owning equities.

Fatehpuria advises investors to focus on large caps where value is clear, as small and midcaps are still 59% above their long-term average and need more time. He also suggests that investors should be selective in SMIDs.

International Investment

Fatehpuria advocates for building globally diversified portfolios, but advises against allocating to international markets in direct response to the underperformance of Indian equities over the last 18 months. Instead, investors should create an all-weather portfolio that can perform in varied market cycles. India captures only nearly 4% of the global equity opportunity, and there are themes like AI, Semiconductors, and Social media platforms that are underrepresented in a domestically biased portfolio.

Investment Strategy

Fatehpuria recommends splitting an investment of ₹1 lakh roughly 80-20 in favour of equity, with the equity portion going into large-cap oriented funds or multi-cap/flexi-cap strategies that are currently overweight on banks, IT, and healthcare sectors. For the 20% in debt, he suggests preferring short-duration funds or corporate bond funds where you are locking in 7-7.5% yields with limited interest rate risk.

Sector Outlook

Fatehpuria is positive about large private banks, with HDFC Bank at 2 times book, Axis Bank at 1.8 times, and ICICI at 2.6 times — decade-low valuations for businesses earning 15-18% ROE. IT is his big contra bet, as the sector is down 25% this year, with TCS and Infosys trading below long-term average multiples despite high ROEs. Healthcare and insurance also look attractive at current levels.

Note: The table above compares the current valuation of various sectors with their long-term average valuations.