Green Portfolio CIO Sees Market Consolidation with Positive Bias by Quarter-End

Market Stabilization on the Horizon, But Volatility Remains

According to Anuj Jain, the CIO and Co-founder of Green Portfolio, markets are entering a stabilization phase, but stabilization does not automatically mean a sharp rally. Markets usually recover once uncertainty starts reducing, even if headlines remain negative.

India's core growth drivers - consumption, capex, and credit growth - remain intact, leading Jain to believe that this looks more like a temporary global shock than a broken domestic story. If crude remains in the $90–100 range and there is no fresh geopolitical escalation, markets should consolidate with a positive bias by quarter-end.

The Impact of Oil Prices on the Economy

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

Oil prices are a major concern, with Brent holding around the $90–100 range despite ceasefire talks. The bigger issue is not just the war - it is the Strait of Hormuz, through which nearly 20 percent of global oil supply moves. Even if the US exits, supply disruptions, damaged infrastructure, and weak tanker movement will keep markets nervous.

This volatility may reduce, but the floor for oil prices has shifted higher, impacting inflation, logistics, and corporate margins globally. Direct beneficiaries of higher crude prices include upstream producers like ONGC and oilfield service providers, while sectors like paints, tyres, aviation, and parts of FMCG face margin pressure.

Sector Rotation and Contrarian Opportunities

The opportunity to play crude oil volatility is much broader than just oil companies. Sectors like renewable energy and EV-related businesses offer a longer-term contrarian opportunity. Sustained high oil prices accelerate the shift toward clean energy, making these sectors attractive investments.

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

Government Support and RBI Action

The government is expected to gradually announce measures to support the economy and prevent a spike in inflation. India imports over 85 percent of its crude oil needs, so high oil directly pressures inflation and the rupee. The government has already started sending signals, encouraging fuel savings, lower imports, and reduced foreign exchange outflows.

Alongside this, I expect gradual policy action rather than one big announcement. If crude remains elevated, the government could cut fuel excise duties, manage food inflation through buffer stocks, and support sensitive sectors through targeted relief. The RBI is also likely to remain cautious on rates, aiming to prevent temporary oil shocks from becoming long-term inflation across the economy.

Market Stabilization and Sector Opportunities

Markets are entering a stabilization phase, but stabilization does not automatically mean a sharp rally. The good news is that the panic selling has slowed, domestic liquidity remains strong, and corporate earnings have broadly held up.

Sector Opportunities and Recommendations

There are several sectors that investors should keep on their radar during this turmoil. Defensive sectors like pharmaceuticals, healthcare, FMCG, and utilities provide stability because demand remains relatively steady even during volatility.

Growth opportunities created by the correction itself include banking, capital goods, infrastructure, defence, and selective metals. India's domestic capex cycle and defence spending remain strong, and many quality businesses are now available at better valuations.

However, caution is still necessary in sectors like aviation, paints, tyres, and parts of real estate, mainly because high crude and input costs pressure margins.

Accumulating IT Stocks and AI Opportunities

The IT sector is trading well below its long-term average valuations, making the risk-reward attractive for patient investors. We have started accumulating selectively, but in a staggered manner. Large-cap companies like TCS and Infosys still face slower growth and cautious management commentary, so we are not aggressive there yet.

However, mid-cap IT companies with stronger AI and digital capabilities are showing better momentum. The market's biggest fear is that AI will reduce traditional IT spending, but in reality, spending is shifting toward AI implementation, cloud, cybersecurity, and data engineering.

AI Supercycle and Future Opportunities

AI today is not just a technology trend - it is becoming a structural transformation similar to the internet or smartphones. The market focus has shifted from simply building AI models to deploying and monetizing them across industries.

AI is now influencing healthcare, defence, logistics, semiconductors, data centres, and even power demand. That is why global companies are making long-term investments in chips, infrastructure, and data centres. For India, this creates opportunities in IT services, SaaS, semiconductor design, and digital infrastructure.

Recommendations and Conclusion

I would divide the market into three buckets. Defensive sectors like pharmaceuticals, healthcare, FMCG, and utilities provide stability. Growth opportunities created by the correction itself include banking, capital goods, infrastructure, defence, and selective metals.

However, caution is still necessary in sectors like aviation, paints, tyres, and parts of real estate. My approach in this market is simple: don't panic, don't rush, but gradually accumulate fundamentally strong businesses sector by sector.

Note: The table above is a summary of the sectors mentioned in the article, highlighting growth opportunities and caution necessary for each sector.