Kashyap Javeri expects volatility in Indian equity markets to continue in the near term, particularly during the first quarter of fiscal year 2027 [1].
This instability threatens corporate profit margins as companies struggle to pass rising costs to consumers. Investors are monitoring whether key sectors can withstand macroeconomic headwinds or if a broader downturn will occur.
Javeri, the fund manager and head of research at Emkay Investment Managers, said that financial and consumer stocks remain attractive investments despite the current market conditions [1]. This outlook persists even as consumer-focused stocks have faced mounting pressure throughout 2026 [3].
Several factors are driving this volatility. Rising input costs and wholesale inflation are squeezing margins, a trend exacerbated by geopolitical tensions [1, 2, 3]. Energy costs have played a significant role, with crude oil prices crossing $110 per barrel [2].
Foreign institutional investors continue to sell, adding further pressure to the domestic market [2]. Javeri said that the combination of high energy costs and inflation creates a challenging environment for companies to maintain pricing power [1, 2].
Despite these risks, the focus on financials and consumer equities suggests a strategy of targeting sectors with long-term resilience. While the near-term outlook for the first quarter of FY27 remains pressured, the underlying value in these sectors is viewed as a primary opportunity for recovery [1].
“Indian market volatility to continue in the near term”
The persistence of high crude oil prices and wholesale inflation creates a 'margin squeeze' for Indian companies. While the overall market remains volatile due to geopolitical tensions and foreign investor outflows, the focus on financial and consumer sectors suggests that analysts believe these specific industries possess the strongest fundamentals to survive the current inflationary cycle.
