Indian stock markets are entering a 'wait and watch' phase as geopolitical tensions and elevated crude prices create uncertainty around earnings outlook. According to The Economic Times, Rohit Singhania from DSP Mutual Fund noted that risks have increased steadily over the past month, with ongoing global conflict refusing to ease. The fund manager explained that while the full impact of higher commodity prices and supply chain disruptions has not yet filtered into the economy, pressure is building beneath the surface. Transport fuel prices and other commodity-linked costs have not increased significantly yet, but the potential for price hikes could hurt demand and corporate profitability over coming quarters. Singhania noted that what we have seen in the last one month or so is the risks have gone up, with the view that the war would not last for long now being challenged by reality.
Despite market corrections in several sectors, Singhania believes valuations remain unattractive for aggressive investment. As reported by The Economic Times, he noted that 16.5-17 is a fair multiple if looking at two years forward, suggesting the current risk-reward ratio is not favorable. DSP has already revised down earnings assumptions and valuation expectations for several holdings, with the fund house maintaining a cautious approach to capital deployment. The Nifty currently appears balanced between upside and downside risks, with yesterday's level around 23,500 offering 7-8% upside potential and 7-8% downside risk. Singhania indicated that another 5-7% correction could create a more compelling buying opportunity, stating that I would not be all in or all out, but yes, another 5-7% correction if at all the market corrects, that is the time I would go aggressively and buy more in my portfolios.
DSP maintains a slight preference for largecaps in the current environment of uncertainty, though portfolio construction remains fundamentally bottom-up rather than market capitalization-driven. According to The Economic Times, Singhania emphasized that investment decisions are based on business quality, valuations, and risk visibility over the next couple of years. The fund house remains constructive on financials, telecom, and select healthcare names over the next 12 to 18 months. The optimism on banks stems from stronger balance sheets across both lenders and corporates, while telecom's defensive characteristics and resilient demand profile provide stability. Healthcare opportunities are driven by earnings visibility rather than valuation comfort, particularly in hospitals and diagnostic businesses. Singhania clarified that as a fund manager we do not start by saying I want to buy a largecap stock or a midcap or smallcap, with investment decisions based solely on fundamental merit.
Singhania struck a cautious tone on the information technology sector, acknowledging that the evolving business environment has made forecasting difficult. As reported by The Economic Times, he noted that IT stocks appear inexpensive on pure valuation metrics, but warned that business visibility remains weak amid concerns over slowing demand and margin pressures. The fund manager explained that every day is a new day today in terms of understanding actual impact, questioning whether challenges are one, two, or three more quarters or could continue for next one-two years. DSP's funds currently remain slightly underweight on IT, with Singhania stating there is no strong fundamental trigger yet to turn positive on the sector. He added that when you compare it with business outlook or business visibility, you feel there is maybe still time to wait it out.
