New Delhi: India’s markets successfully navigated a turbulent quarter of geopolitical shocks, and US-Iran peace deal and oil trading near $70–$80 per barrel will help ease inflation, support the rupee, reduce the import bill, and benefit rate-sensitive and oil-consuming sectors, a report said on Tuesday.
The report from smallcase said the key risk remains any breakdown of the peace deal or renewed disruption at the Strait of Hormuz. It could re-spike crude, revive inflation and rate-hike concerns, and reverse gains across both rate-sensitive and oil-consumer sectors.
The investment platform currently favoured financials, realty and autos. It also suggested OMCs, aviation, paints and tyres as they see margin relief due to fuel cost dip.
“The round trip in crude from $102 to $115 and back to $82 shows just how sensitive inflation, rate expectations and rural-linked sectors remain to developments around the Strait of Hormuz,” said Narender Singh, smallcase manager and Founder and CEO at Growth Investing.
With a peace deal now on the table, the focus for Q2FY27 shifts to whether crude can sustainably settle in the $70–$80 range, which would meaningfully ease the inflation and growth concerns the RBI flagged this quarter, he added.
The report also noted intensifying heat conditions across India, with global air quality platform IQAir that all of the world’s 50 hottest cities were located in the country on April 27, 2026 — underscoring the broader climate and energy pressures weighing on the economy.
Foreign institutional investors were net sellers, withdrawing roughly Rs 70,000 crore in April, Rs 56,000 crore in May and about Rs 46,000 crore in June so far, taking total FII selling for the quarter to about Rs 1.72 lakh crore.
The report attributed the outflows to elevated crude prices, a weaker rupee and broad geopolitical risk aversion that pushed foreign investors toward safer assets.
The Reserve Bank of India (RBI) held the repo rate steady at 5.25 per cent at both its April and 5 June 2026 meetings, maintaining a neutral stance.
While the decision was unanimous, the report noted that a growing minority of economists have begun pricing in at least one rate hike by year-end should oil prices stay elevated.
(IANS)
