Baldev Prakash, managing director & CEO at SBICAP Securities in an emailed interview with Rex Cano says that the current US-Iran tensions may be short-lived as high oil prices could cause an inflationary impact on the US economy. Back home, Prakash expects Q1FY27 earnings, management commentaries, monsoon progress, and the geopolitical environment to set the market trend in H2CY2026. Edited excerpts: West Asia tensions continue to flare up intermittently, keeping global markets on edge. In such an environment, what should an investor’s strategy be—buy the dips, sell the rallies, or stay on the sidelines? In the backdrop of a fragile Iran-US MoU, the eventual outcome of the West Asia conflict remains uncertain. Having said that, we do not expect a prolonged escalation as most countries in the region have strong economic and strategic incentives to maintain stability. Moreover, higher crude oil prices directly impact the US retail fuel prices and have an inflationary impact on economy, thereby putting pressure on bond yields. Hence, it is in interest of US to ensure that crude oil prices remain subdued and Strait of Hormuz should keep functioning. However, if tensions escalate into a full-scale war and crude oil prices surge beyond $120–130 per barrel, investors may consider adopting a cautious stance and hedging portfolio exposure. ALSO READ | Crude oil prices will be the key driver of equities for now: Nilesh Shah What are your expectations from the June 2026 quarter (Q1FY27) earnings season? Which sectors do you believe are likely to outperform or disappoint? During Q1FY27, we expect Banks, NBFC, Auto and auto ancillaries, Metals, Value Retailers, Consumer Discretionary (Hotels, Jewellery, Liquor), Telecom, Healthcare, EMS, Defence, Capital goods and Power to report healthy earnings growth. In contrast, OMCs, Agro-chemicals & Cement companies may witness margin pressure in the backdrop of elevated crude oil prices. Consumer staples universe should report incrementally better results led strategy of price hikes and premiumisation adopted by companies to tackle higher packaging cost. Information technology (IT) sector may report relatively muted earnings growth performance. How do you assess TCS’ Q1 performance? Does it set the tone for the rest of the IT sector? Given the sharp correction in IT stocks so far in 2026, is this an opportunity to start accumulating quality names? While the quarterly performance was broadly in line with expectations, management commentary remained encouraging. Deal momentum continued to be strong, with annualized order bookings exceeding $40 billion. FY27 is expected to be better year of growth than FY26. The noteworthy area in the result was commentary related to AI adoption at client end. Artificial intelligence (AI) is increasingly becoming a core part of large transformation programs rather than a standalone offering. This is helping TCS win larger contracts, expand deal sizes and accelerate project execution. We would await earnings and management commentary from other IT companies before turning more constructive on the sector. That said, we continue to remain positive on OFSS, Coforge, TCS, FSL, Mphasis and Infosys from a medium- to long-term perspective. ALSO READ | Market re-rating will take time: 360 ONE Asset CIO Anup Maheshwari Do you expect mid- and small-cap stocks to continue outperforming large-caps in H2CY26? We continue to see opportunities across the mid- and small-cap space. Key themes that are likely to outperform over the medium term include Capital Goods, Defence, Renewables (across the power value chain), Auto Ancillaries, Banks, Wealth Management, Capital Market-linked businesses, Value-added Metals & Metal Products, Fluorine-based Chemicals, Healthcare (Hospitals, Formulations and CDMO), Jewellery, Liquor and EMS etc. In a nutshell, wealth creation opportunities exist across the entire market cohort, and investors are recommended to focus on adopt bottom-up stock specific approach. Metal stocks have remained under pressure since the US imposed fresh tariffs in June. Do you see this as a temporary setback or a structural headwind for the sector? The US tariff imposition in June 2026 is a temporary earnings headwind and short-term sentiment overhang, rather than a structural negative for the Indian metals sector, as the US is not a major export market for India. We remain constructive on steel companies that benefit from domestic demand, integrated operations and ongoing capacity expansions. In our assessment, the medium-term performance of the sector will be shaped more by China’s supply and demand dynamics and India’s infrastructure-led growth in steel consumption than by the direct consequences of US tariffs. ALSO READ | Valuation excesses in low-quality stocks pose biggest risk: Vinay Paharia Is this a good opportunity for investors to accumulate precious metals, or would you wait for a deeper correction? Gold should ideally form around 5–10 per cent of an investor’s financial portfolio, either through physical holdings and/or paper instruments. In the near term, with major central banks gradually adopting a tighter policy stance to address inflationary risks and the US dollar strengthening, precious metal prices may remain under pressure and are likely to consolidate in the 5-10 per cent band. Given the current macroeconomic and market environment, what would be your ideal asset allocation between equity and debt for a long-term investor? As a thumb rule, 100 minus your age should be the allocation towards equity and rest towards debt. In the current scenario, an investor can allocate 70 per cent towards equity, 20 per cent towards debt instruments and 10 per cent towards precious metals. Kindly note, before allocating funds towards equities, one should have liquid cash to cover your 3–6-month expenses and health insurance.
