“In this kind of a carnage, when there is so much uncertainty, there are very few hiding places as of now,” Aggarwal told ET Now, describing a market where even traditionally defensive sectors are under pressure.
ETMarkets.comThe real economy has not felt it yet — but it will
The critical distinction Aggarwal draws is between financial market pain and real economy pain. So far, Indian consumers have been partially shielded: petrol and diesel prices have not yet been raised to reflect global crude levels. But that protection is temporary. Once retail fuel prices are adjusted, the ripple effect into household budgets, transportation costs, and manufacturing input prices will begin in earnest.
“The real fear is that once fuel price hikes start hitting consumers, the impact on the real economy will begin to flow — and that changes everything.”
Companies that use gas as a feedstock — tile manufacturers, QSRs, processed food producers — face limited ability to switch energy sources. While other producing nations will eventually ramp up supply, the feedstock prices at which businesses will be procuring over the next one to two months will be materially higher than a month ago. Margins will compress, and those costs will work their way into consumer prices.
Banking sector: Not all private banks are HDFC Bank
The sharp decline in HDFC Bank has triggered selling across private sector banking names, but Aggarwal urges investors not to extrapolate. The pressure on HDFC Bank was partly structural — elevated loan-to-deposit ratios and slowing growth rates predated the current crisis. Other private banks are in a different position. ICICI Bank and Kotak Mahindra Bank “look reasonably good,” he notes, while HDFC Bank itself, around the 800-level, offers an attractive risk-reward for investors willing to wait for the dust to settle.
IT: Relatively insulated, but not a structural buy
The Nifty IT index has shed over three percent in recent sessions, but Aggarwal sees a nuanced picture. IT companies are less exposed to input cost shocks or domestic demand disruption than most other sectors. Accenture’s recent commentary suggests Q4 numbers may hold up better than feared. This makes IT a potential relative outperformer in the near term — not because the structural challenges from AI have gone away, but because the current crisis hits other sectors harder. “IT might be relatively insulated in the near term,” he says, though he remains cautious on the sector’s long-term earnings trajectory.
Why FII selling may not stop soon
The foreign institutional outflow is not purely a yield trade, Aggarwal explains. Yes, US 10-year yields above four percent make dollar assets attractive. But the bigger drivers are a depreciating rupee, India’s elevated valuation relative to its 15-year average, and a genuine risk to growth if the conflict extends. With SIP inflows sustaining DII buying for now, markets have found some floor — but that support is not unconditional. If the selloff deepens, even domestic flows could moderate.
Sectors worth watching through the volatility
Domestic-centric businesses: Companies with no gas feedstock dependency and limited global exposure hold up best in this environment.
Select private banks: ICICI Bank and Kotak offer better risk-reward than the sector average; HDFC Bank attractive near 800.
IT (tactical): Near-term relative insulation from input cost shock; watch Q4 guidance closely before committing.
Avoid : Crude derivative sectors (tiles, QSRs, processed food) until feedstock price stabilisation is visible.