Indian equities remain attractive over long term despite near-term risks: Report

New Delhi, July 27 (AHN) Indian equities warrant a 'constructive' view over the long run due to demographics, rising domestic investment, a deepening financial system, diversifying supply chains and improving energy security, a report said on Monday.

The report from PL Wealth recommended investors consider a phased entry into quality large‑cap and large & mid‑cap names in the short term and kept an overweight call for the 24–60-month horizon.

The firm kept its overweight call on India intact over the long term "with mid-caps, small-caps and infrastructure-linked themes as preferred building blocks for SIP-based investors."

Over the medium term (6 to 24 months), attention should shift to domestic demand drivers — financial-asset penetration, infrastructure build-out and manufacturing localisation as oil-driven pressures fade and inflation tops out. The firm also noted room to add large private banks, industrials, healthcare, and select small-cap and flexi-cap exposure.

"India's underlying economic engine is running steady even as crude prices, a softer rupee and persistent foreign selling create near-term turbulence, pushing the firm to recommend a more selective, quality-first approach to equities," the report said.

“India is entering FY27 from a place of comparative strength, but that shouldn't be mistaken for calm — oil, the rupee and an unpredictable Fed under new leadership are all live risks," said Inderbir Jolly, CEO, PL Wealth.

The firm flagged a meaningful uptick in inflation risk, noting the RBI has lifted its FY27 consumer price index estimate to 5.1 per cent with a projected Q3 spike to 5.9 per cent.

"Persistently high crude, unresolved tensions in West Asia, and a rupee that has structurally weakened toward the 94.5–95 mark against the dollar are all cited as reasons markets could stay choppy in the months ahead," it forecasted.

The near-term earnings estimates continue to face downward pressure, with FY27 profit forecasts being trimmed across banking, consumption, infrastructure, pharmaceuticals and utilities — even as FY28 numbers are proving more resilient.

While participation across mid- and small-cap stocks has widened over the last six months, the report noted that the rally is still being led by a narrow set of sectors rather than the market as a whole.

—AHN

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