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Macroeconomic Outlook & Market Drivers

  • Macroeconomic Outlook & Market Drivers
  • Corporate Earnings Growth
  • Sectoral Strategy & Portfolio Allocation
  • Oil Marketing Companies (OMCs) & Trading Dynamics

On this page

  • Macroeconomic Outlook & Market Drivers
  • Corporate Earnings Growth
  • Sectoral Strategy & Portfolio Allocation
  • Oil Marketing Companies (OMCs) & Trading Dynamics
Podcast/May 25, 2026/4 min read/youtu.be

“Bull Market Is Back!” Expert Predicts Strong Rally Ahead For India | IT Still Trouble? | ET Now

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Watch on YouTube ↗
  • Speaker: Dinshaw Irani, (CEO - Helios Capital India).

Macroeconomic Outlook & Market Drivers

  • Market Sentiment: The expert states that the markets have entered a strong bull phase, jokingly correlating it with the exact time they changed their eyeglasses [00:00:08]. The expert also wore a specific shirt featuring a bull icon on the chest to underscore this bullish outlook [00:00:24].

References

  1. Original source (youtu.be)

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Published
May 25, 2026
Read time
4 min read
Progress0%
  • Crude Oil Overhang: High crude prices driven by geopolitical tensions in the GCC (Gulf Cooperation Council) region remain the primary macroeconomic hurdle for India [00:00:19]. Because India imports roughly 5 million barrels of crude per day, any upsurge directly impacts the current account deficit [00:01:00].
  • Capital Flows Audit: FPI (Foreign Portfolio Investment) and FDI (Foreign Direct Investment) flows are noted as becoming almost zero for India due to these macro pressures [00:01:14].
  • Geopolitical Deal Dynamics: Both international parties are viewed as desperate to sort out the conflict [00:00:36]. The US is currently holding out because they want a clean, long-term deal on the table so they do not have to return to negotiations later [00:00:42]. Once a clean deal happens, crude is expected to come off [00:00:52].

  • Corporate Earnings Growth

    • Q4 Surprises: For the quarterly results reported so far, earnings have surprised positively [00:01:20]. Prior to the war, analysts predicted early-to-late teens earnings growth [00:02:49]. After the war started, projections dropped to early teens, but actual numbers for the overall Nifty 500 index came in stronger at mid-to-late teens [00:02:56].
    • Midcaps and Small Caps Data: Midcaps have been an earnings outlier [00:01:27]. Even when normalizing midcap earnings by removing companies that moved from loss to profit—specifically citing Vodafone and Indian Bank (transcribed as "Hinden bank")—the remaining universe (with roughly 80% of market cap having reported) shows earnings growth in the mid-20s [00:01:35]. Small cap earnings growth is sitting in the early 20s [00:01:48].
    • Q1 Projections & Margin Pressure: The current June quarter (Q1) will be a trying one where inflation and raw material cost escalations hit margins the hardest [00:02:02]. Analysts initially projected mid-single-digit earnings growth for this quarter because corporates were absorbing the raw material hikes [00:03:26]. However, quite a few companies have already started passing these cost hikes to end consumers, specifically seen in the Auto and Oil & Gas sectors [00:03:42].
    • Market Discounting: The expert notes that markets always discount future earnings well in advance, meaning this tough quarter was already priced in when equity values collapsed initially during April and May [00:04:02].

    Sectoral Strategy & Portfolio Allocation

    1. Market Cap Realignment

    • Portfolios for the end of May will reflect a fair bit of reduction in large-cap exposure [00:08:30]. Capital has been reallocated to increase exposure to mid and small caps because their forward growth rates are expected to be far more exciting [00:08:36]. Large caps have completed their specific role of stabilizing the market [00:08:48].

    2. Sectors Under Accumulation

    • New-Age Tech & Discretionary: The fund is accumulating stocks in new-age tech companies where sharp corrections occurred due to an "unnecessary overhang of AI talk" [00:07:34]. Upon looking deeper, the expert claims AI will not impact these specific companies immediately [00:07:57]. They are also buying consumer discretionary names [00:08:10].
    • EMS and Infrastructure: They are adding exposure to the EMS (Electronics Manufacturing Services) and infrastructure space, where they view recent market corrections as overdone [00:08:16], [00:09:04].

    3. Sector to Avoid: Information Technology (IT)

    • IT Thesis: The fund remains completely void of IT sector exposure [00:09:11]. Even though large-cap IT valuations look attractive at roughly 16 to 17 times forward earnings, they anticipate a painful structural reset [00:09:19]. They expect AI to cause significant margin compression and flat-to-negative growth rates for these companies [00:09:27].

    Oil Marketing Companies (OMCs) & Trading Dynamics

    • Break-Even Math: OMCs raised fuel prices by 8 Rupees per liter in May [00:04:28]. To fully break even at the EBITDA level, they require either an additional price hike of 4 to 5 Rupees or for the domestic crude basket to drop back down to $92 per barrel [00:04:50]. The current basket sits at $97–$98 per barrel [00:04:55].
    • Asymmetrical Margins: OMCs are moving away from a period of severe losses [00:05:10]. Retail pump prices rarely come down once they are raised; during the last cycle, prices were kept high even when crude dropped back down to $60–$65 per barrel [00:05:28]. If global crude drops below $92, these existing retail prices will remain steady, resulting in very strong corporate profits [00:05:42].
    • Fund Positioning: The expert manages a long-short fund that was previously short on these OMC names [00:06:03]. They completely covered and cut their short positions after positive diplomatic and economic news began emerging from the Gulf region [00:06:08]. They are not aggressively buyers or structurally bullish on the space right now [00:05:56], [00:07:10].
    • Government Oversight & CapEx: Although fuel pricing is liberalized, the government handles OMC capital prudently [00:06:38]. When crude falls, the state does not force companies to cut consumer prices, allowing them to retain profits to fund aggressive capital expenditure blueprints and pay healthy dividends that reduce the national fiscal deficit [00:06:20], [00:06:50].

    Jun 2, 2026

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