Oil Prices May Hinder Equity Markets, But Double-Digit Earnings Growth Expected

Higher oil prices may be a macro headwind for equity markets, but they do not necessarily prevent positive returns. According to Shailendra Kumar, Chief Investment Officer at Narnolia Financial Services, Indian corporate earnings are expected to deliver double-digit growth in FY27.

Kumar points out that even if tensions around the Strait of Hormuz ease, there is a possibility that crude oil prices could remain above $100 per barrel for some time. He notes that during April, Brent crude traded close to $100 per barrel, yet the Nifty staged a strong recovery from its March lows.

Kumar expects earnings momentum to strengthen in the second half of FY27, resulting in robust year-on-year growth during the period. He bases this on leading indicators such as credit growth, GST collections, automobile sales, and cement dispatches.