“DIIs are keeping their gunpowder ready for the earnings season,” he said in an interview with ET Now, pointing to waning net positive DII flows—Rs 2,400 crore on Friday and just Rs 1,000 crore on Thursday—as evidence that institutions are not yet willing to step in decisively.
The earnings season, he argues, is unusually consequential. The March quarter will absorb the oil price shock, but that is already the consensus. What matters more is the guidance — specifically, what FY26-27 Nifty and midcap EPS trajectories will look like, and whether forward PE multiples, currently below 5-10 year averages, can hold once earnings estimates are downgraded.
“Earlier, there was a 14% expectation for the Nifty EPS; I do not think that will hold true,” Subramaniam says. Whether it comes down to 12% or 11% will shape how the market re-rates from here.
Retail investors, meanwhile, jumped back in on Thursday and Friday, while midcaps and smallcaps outperformed largecaps through the week. SIP inflows stood at Rs 32,000 crore, with overall mutual fund inflows at Rs 40,000 crore. But Subramaniam is wary of this exuberance. “Retail tends to overreact,” he warns, adding that Trump-induced volatility will remain a dark cloud in the near term.
For investors sitting on cash, Subramaniam’s prescription is clear: this is an accumulation phase, not a trading phase. The war-driven oil spike, he believes, is time-limited. Once it resolves, oil may not return to $65 but could settle in the $80-85 range, a level the Indian economy can absorb, albeit at a slightly lower growth rate.
“When the dust settles, India will continue to be a long-term attractive market,” he says.His sterner warning is for those tempted to reposition portfolios amid the uncertainty. Subramaniam points to the counterintuitive price action in gold and banking, both sectors widely expected to be war-insulated, yet both have taken hits. “Do not try to judge,” he says, advising investors to hold a diversified portfolio close to what they had before the conflict escalated.
For those already fully deployed with no dry powder, the advice is simpler still: “Just stay quiet. Do not engage in panic-related selling.”
Consumer Discretionary: The Summer Test
At the top of Subramaniam’s watchlist is consumer discretionary, and the reasoning is seasonal. Summer demand data, for consumer durables, paints, and related categories, will be the real signal, not the current quarter’s earnings, which will be weighed down by elevated input costs from oil, steel, and other commodities.
“I am not so focused on the current quarter’s earnings for consumer discretionary,” he says. “But by the time the consumer stocks come in, the sales numbers during the summer will come in. If that gives a positive, then I know the future quarters are going to look good.”
Layered on top of that is the monsoon. How rainfall develops will determine rural demand, with direct implications for FMCG and allied sectors. Subramaniam flags this as a second variable he is watching closely.
Banking: NIMs in the Crossfire
Banks present a more nuanced picture. Interest rates show no sign of being cut anytime soon — in the US or India — but credit growth remains robust. The critical question for Subramaniam is whether that credit momentum can be sustained.
If summer consumer demand holds up, if people are willing to take on higher EMIs to buy durables even in a higher-rate environment, partly cushioned by the GST cut, then banks can defend their pricing power and protect net interest margins. But if consumers pull back and retail lending slows, the pressure on NIMs could intensify, with deposit costs remaining firm or rising modestly given the inflationary backdrop.
Private sector banks and NBFCs, he notes, are especially sensitive to this dynamic, given their heavy reliance on the retail lending segment.
Capital Goods: Watching for Private Capex Surprises
The final piece of Subramaniam’s watchlist is capital goods, specifically, whether private sector capex is quietly picking up. He is listening closely to earnings calls for any signal that companies are talking about capacity expansion.
“If companies during their earnings call are talking about expanding capacities, then that is good news,” he says. With capital goods stocks already under pressure, any such signal could make the current moment an attractive entry point for investors willing to look through near-term weakness.