Sanjeev Prasad, Managing Director and Co-Head of Kotak Institutional Equities, believes the recent correction has made several largecap sectors attractive despite near-term macro uncertainty. According to reports from CNBC TV18, Prasad said the market is navigating several short-term challenges, including oil prices, inflation and global bond yields. However, he believes the medium-term picture remains favourable if crude settles in the $70-$80 per barrel range. Prasad expects India's macro position to improve if crude oil prices ease and traffic through the Strait of Hormuz normalises over the coming months.
NSE's latest market pulse data report reveals that considering the impact of elevated crude oil prices, FY27 earnings estimates for top 200 companies have been trimmed by 0.9%. As reported by Upstox, the new implied earnings growth now stands at 9.2% as of September and 16.4% since March-end. The report highlights that energy, materials and consumer discretionary sectors accounted for more than 81% of the downgrade since March 2026. Meanwhile, excluding these three sectors, the decline in FY27 earnings estimates was a more modest 1.1%. The energy sector's share in earnings is expected to decline from 17.6% in FY26 to 13.4% in FY27, while the financial sector's share is expected to increase to 38.7% in FY27.
As reported by CNBC TV18, Prasad identified financials, including banks, insurance companies and NBFCs, among the sectors offering value. He also highlighted Oil and Natural Gas Corporation (ONGC), noting that the stock appears inexpensive despite higher crude prices, and said Bharti Airtel remains attractive based on its forward earnings valuation. Consumer stocks have also become more reasonably priced after a sharp decline in valuation multiples, with companies such as Dabur, Godrej Consumer Products and Hindustan Unilever seeing their earnings multiples fall significantly compared with previous years. The NIFTY Smallcap 250 saw 33% YoY growth in profit after tax for the preceding quarter, validating the rally in smallcap stocks in the recent past.
According to Upstox reports, Q2FY27 witnessed strong headwinds with sharp spike in crude oil prices as tensions in the Middle East rose again. The NIFTY50 has broadly remained negative in Q2 of FY27, delivering -2.2% returns till date, while the broader NIFTY500 is down 1.4% for the same period. However, Q1FY27 earnings season witnessed strong surprises in the broader market as earnings grew over 20-30% across midcaps and smallcaps. The share of NIFTY50 companies in NIFTY500 profits jumped from 51.6% in FY26 to 53.3% in Q1FY27, while NIFTY Smallcap 250 saw 33% YoY growth in profit after tax. Largecap companies posted stellar earnings, except for energy sector which posted a negative turnaround across all major companies.
According to Prasad's assessment reported by CNBC TV18, he expects India's macro position to be in a pretty strong position from a longer-term perspective. While acknowledging long-term opportunities in themes such as precision engineering and domestic manufacturing, Prasad cautioned that valuations have become stretched. He also warned that the wires and cables industry could face margin pressure as new capacity comes on stream over the next few years, potentially leading to overcapacity. Prasad expects investors should remain selective, focusing on businesses where valuations adequately reflect growth prospects rather than paying premium multiples across an entire company because of a small high-growth business segment. The sectoral rotation will drive share prices of stocks in respective directions, with institutional flows shifting away from OMCs and key material companies due to elevated energy prices.
