Despite geopolitical tensions in the Middle East, including the Iran-US conflict, Ajay Khandelwal, Head of Equities at Motilal Oswal Asset Management Company, believes India's growth trajectory remains resilient. In an exclusive email interview with NDTV Profit, Khandelwal projects India could still achieve around 6.5% real GDP growth even if crude oil averages $85 per barrel. The fund manager emphasized that geopolitical tensions alone should not drive drastic portfolio shifts, as India's economic fundamentals remain strong enough to weather oil price volatility. As per NDTV Profit, Khandelwal stated that investors should "not make a drastic portfolio shift based on geopolitics alone" and instead focus on businesses with financial strength and domestic demand visibility to navigate volatility.
Under the $85 crude scenario, Khandelwal expects India's current account deficit (CAD) to remain manageable at about 1.5% of GDP, as reported by NDTV Profit. He projects India's balance of payments to stay positive at around $48 billion, providing some comfort despite the risks posed by higher oil prices. This positive balance of payments position suggests India's external financial position would remain stable even under challenging oil price conditions. According to NDTV Profit, Khandelwal noted that "this is a phase to increase portfolio quality rather than reduce equity exposure" and emphasized using volatility to add to businesses with strong quality, growth, leverage and pricing power characteristics.
Khandelwal favours companies with strong balance sheets, domestic demand and pricing power, which he believes can remain better positioned if geopolitical tensions persist. According to the interview, he identified financials, defence and select domestic infrastructure as areas that could benefit from the structural environment. At the same time, he recommended greater caution towards oil-intensive businesses, highly leveraged companies and sectors vulnerable to imported inflation. His preference is not to reduce equity exposure but to improve portfolio quality amid volatility, focusing on businesses with "strong QGLP characteristics" to navigate the current challenging environment.
Khandelwal's comments reflect a broader constructive view on Indian equities, as reported by NDTV Profit. While acknowledging that valuations are not cheap, he believes healthy corporate balance sheets, improving return on capital employed and a supportive macroeconomic environment can support earnings growth. The fund manager expects stable interest rates, improving government and private capex and comfortable liquidity to support growth over the coming quarters. His message to investors amid geopolitical uncertainty is clear: focus on businesses with financial strength and domestic demand visibility to navigate volatility rather than making broad portfolio changes based on crude oil or global risks.
