Expert view: Rahul Ghose, the founder and CEO of Octanom Tech and Hedged.in, believes higher oil prices, a stronger dollar, low private capex, and unsecured credit stress are the key risks for the Indian stock market. In an interview with Mint, Ghose said FY27 will not be a washout year, but it will not reward lazy positioning either. Edited excerpts:
If we leave geopolitical issues aside, what are the other key risks for the market at this juncture?
There are four risks I would watch closely. The first is the dollar. When the rupee is under pressure, the market does not treat it as a currency issue alone. It affects foreign flows, imported inflation, corporate margins, and the way global investors price India.
If the dollar stays strong and the rupee keeps weakening, FPIs become more sensitive to valuation and earnings disappointment. That is a real risk in the current setup.
The second is oil. India can handle moderate crude, but a sustained spike changes the equation very quickly. It affects the current account, inflation, logistics costs, aviation, paints, chemicals, and household purchasing power.
More importantly, it limits how much comfort the RBI can provide through rate cuts. So oil is not a single-sector problem. It becomes a macro risk for the market.
The third is private capex. Three years of government-led investment were supposed to gradually crowd in private sector spending. The NSO survey for FY27 shows capex intentions falling 16.5% to ₹9.55 trillion.
More than 21% of companies surveyed have no capex plans for the year. The crowding-in is happening, but much slower than the original thesis assumed.
The fourth risk is unsecured credit stress. Headline bank NPAs look manageable, but personal loans, credit cards and microfinance are where strain is more visible. It is not systemic yet, but that segment has quietly financed a meaningful part of consumer spending over the past two years.
If lenders pull back, and some already are, the impact can show up in consumption data before it becomes obvious in NPA disclosures.
Can FY27 be a washout year for the domestic market?
No. But it will not reward lazy positioning either. GDP is still expected to hold in the 6.5 to 7% range. Earnings consensus for FY27 is somewhere between 13 and 16%. The RBI has room to cut if inflation cooperates. Rural demand is recovering. None of that is a washout backdrop.
The downside scenario exists. UBS has reportedly cut its FY27 GDP estimate to 6.2%, and the reasoning is oil prices, monsoon risk and rupee weakness running together. That is a fair bear case. It is not what I would treat as the base case.
The more honest way to describe FY27 is as a year of sharp differentiation.
Private bank valuations are near the lower end of their five-year range, and that is where the risk-reward looks more reasonable.
Premium consumption, on the other hand, is still priced for an outcome the data does not fully support. Buying the index and waiting may be a dull experience. Picking the right pockets can be a different story.
One major reason behind FPI outflow is the lack of AI play in India. Does it mean we will continue witnessing foreign capital outflow over the medium term?
The AI flow argument is real, and the numbers support it. FPI outflows from Indian equities have crossed ₹2 lakh crore in 2026 so far. In the same period, global capital has been rotating toward markets with direct AI and semiconductor exposure.
Taiwan has TSMC. Korea has Samsung and SK Hynix. India cannot offer that kind of listed AI hardware exposure at scale today.
But the medium-term conclusion being drawn is too linear.
The AI buildout is currently in its infrastructure phase: chips, data centres, power and hardware supply chains.
That is where capital is going. What comes after infrastructure is implementation. Enterprises will need to deploy AI across operations, processes, software stacks and customer systems.
That is where Indian IT services become relevant. TCS, Infosys, Wipro and HCL Tech are not Nvidia.
But they are part of how large global corporations will implement AI at scale. That allocation story has not fully reached FPI thinking yet.
FPI flows eventually follow earnings. Once Indian corporate numbers deliver consistent double-digit growth and the valuation gap versus other emerging markets looks more reasonable, the rotation back can happen faster than today’s pessimism suggests.
So, I would call the current outflow cyclical, not structurally permanent.
Can PM Modi’s austerity call impact consumption?
It is worth being precise about what was actually said, because the word austerity is carrying more weight than the substance behind it.
The Prime Minister’s appeal was around buying less gold, reducing overseas travel and using less fuel.
That is a specific message in a specific macro context. India’s gold import bill has risen sharply, oil prices have been elevated, forex reserves have come under pressure, and the rupee has been among Asia’s weaker major currencies this year.
So I would read this as a current account message, not a consumption message.
The consumption that drives most listed Indian companies is not the same as the consumption being discouraged.
Daily staples, domestic mobility, healthcare, education, basic services, organised retail and domestic discretionary categories are not materially affected by a call to reduce avoidable gold buying, unnecessary fuel use or excessive overseas spending.
If the message lands and behaviour shifts, even a 15 to 20% reduction in gold imports from that $72 billion base , the current account improves materially.
The RBI gets room to cut. I’d expect 50 to 75 basis points in H2 FY27 if this plays out. Rate-sensitive domestics are the direct beneficiary: housing finance companies, private banks, and consumption-linked NBFCs.
The market that sold off on the austerity headline will look back at those names as a buying window.
What sectors are you betting on for the next one to two years?
Private banking first, mostly for valuation reasons. The Nifty Private Bank index is near the lower end of its five-year valuation range.
You are getting reasonably well-run banks at prices the market was comfortable paying earlier, before the rate cycle and FPI selling compressed multiples.
That kind of setup usually does not stay ignored forever.
Capital goods and domestic infrastructure, selectively. Government capex is real, and execution is showing up.
Siemens Energy’s 52% profit jump this quarter is not an accident. It reflects two years of order intake converting into revenue.
Names with defence, railways, transmission and industrial exposure still have earnings visibility that is difficult to find elsewhere.
Pharma also looks interesting because it combines stable domestic growth with improving US generics dynamics.
The worst of the pricing pressure and regulatory headwinds appears to be behind many of the larger players.
It is not the most exciting call, but it gives a portfolio some stability.
What I would avoid is also clear: premium consumption at stretched valuations, new-age companies still burning cash without a visible earnings path, and unsecured NBFC exposure until the credit picture is cleaner.
What is your assessment of Q4 FY26 earnings? What are the notable surprises and disappointments?
Q4 FY26 tells you two stories, depending on which part of the economy you’re looking at.
The old economy delivered strongly. Vedanta’s net profit up 89% to ₹9,352 crore. HPCL’s annual profit is up over 400%, with Q4 alone up 78% year-on-year. Oil India up 62% on record production.
Siemens Energy up 52%. BSE up 61%, which reflects how active domestic markets have been through the year.
These are real operating results. The commodity and infrastructure cycle worked.
The disappointment has two clear parts. SBI reported ₹19,684 crore in Q4 net profit, up 5.58% year-on-year.
The stock dropped 7.4% on results day. That market reaction tells you more than the reported number.
The expectation was higher, and the gap between what arrived and what was priced in signals that earnings growth expectations for the banking sector are being reset, not collapsed, reset.
That’s an important distinction going into FY27. In electronics manufacturing, Kaynes Technology grew revenue 27.8%, but profit fell 21.5% year-on-year.
Margin compression in EMS is the part of the PLI story that the market over-credited.
Revenue growth on shrinking margins is a problem this sector still needs to work through before the rerating thesis holds up.
The third area of quiet disappointment was IT services guidance. The Q4 numbers weren’t bad, but management commentary from the tier-one companies was cautious on discretionary tech spending through Q1 FY27.
Nobody’s cutting estimates dramatically, but the earnings upgrade cycle in IT that the market wanted to see hasn’t arrived.
I think it arrives in H2 FY27 when AI implementation spending starts showing up in enterprise budgets.
When it does, IT moves fast. Q4 was a reminder that you’re still waiting, and patience is the price of entry.
The broad signal from Q4: corporate India is holding up. But the upgrade cycle for FY27 will not be smooth or wide.
Where pricing power and operating leverage are real, the results prove it plainly. Where they’re not, Q4 has already started making that visible.
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Disclaimer: This story is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
