ETMarkets.comThe situation, which began deteriorating around March 3, has put markets on edge. Uttam Kumar Srimal, Deputy Head of Research at Axis Securities, told ET Now that the evolving geopolitical and supply dynamics make crude the single biggest near-term risk to the Indian economy — an economy that is otherwise fundamentally strong.
“Structurally, the Indian economy remains in very good shape — GDP growth has been solid, inflation benign, and foreign reserves healthy. But crude is a real risk if it sustains above $100,” says Srimal.
Why $100 is the line in the sand
India imports roughly 85% of its crude oil needs, making it among the most energy-import-dependent major economies in the world. When oil prices rise sharply, the impact cascades — from a widening current account deficit and a weakening rupee, to inflationary pressure on consumers and margin compression for corporates.
Srimal’s analysis sets a clear fork in the road: if crude retreats below $90 per barrel, the Indian economy faces no major structural stress. But if prices remain above $100 for a sustained period, the damage will begin showing up in corporate earnings from Q1 FY27 — and become more pronounced through Q2 FY27.
What this means for earnings estimates
Axis Securities has not yet revised its earnings forecasts pending more clarity on how long elevated crude persists. Srimal acknowledged that Q4 of the current fiscal year is likely to be somewhat insulated, given that the spike is recent. However, if prices hold above $100 into the next fiscal year, a measurable earnings cut across sectors becomes unavoidable — particularly in paint, chemicals, aviation, and consumer goods companies with high input cost sensitivity.
Investment strategy: Selective, not defensive
Rather than advising a broad retreat from equities, Axis Securities is recommending that investors maintain existing positions and selectively add stocks with clear near-term earnings visibility and strong balance sheets. The message is nuanced: this is not a panic moment, but a period for disciplined stock picking over broad market bets.India’s macroeconomic buffers — a well-stocked foreign exchange reserve, moderated inflation, and robust GDP growth — give the economy a cushion that many other emerging markets lack. That makes a selective accumulation strategy viable, even as risks build.
Eternal Limited: A buying opportunity in the correction
Srimal highlighted Eternal Limited as a specific opportunity amid the broader market volatility. With the stock correcting to around ₹215 — and posting a 6% single-day rally — Axis Securities maintains a target price of ₹360, implying significant upside on a medium-to-long-term basis. The firm points to strong Q3 earnings, ongoing business expansion, and a healthy cash position on the balance sheet as key reasons for conviction in the stock.
For investors, the broader takeaway from Axis Securities’ current stance is clear: India’s fundamentals remain intact, but crude oil is the variable that could reshape the earnings landscape in the months ahead. Watching the $100 level — and the durability of any move above it — will be the most important market signal to track heading into FY27.