Lower oil prices would boost India’s economy, support banks and consumer sectors: Nilesh Shah

Nilesh Shah said India’s economic outlook could improve if crude oil prices remain contained, as lower energy costs would ease inflation and support demand. He highlighted that stable oil prices, along with policy support, could benefit key sectors, with banking and consumer-focused businesses likely to see improved traction in the current environment.

He said, “If the price of oil is on the lower side in double digits rather than triple digits, that's positive for the Indian economy,” highlighting the importance of stable energy costs for growth and inflation.

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Shah outlined key factors for India, including the safety of citizens in the Middle East, remittance flows, and the availability of oil and gas. He added that the reopening of the Strait of Hormuz will be crucial for supply normalisation.

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On markets, Shah said focus will shift to earnings. “Returns will be moderate more-linked to earnings growth than to valuation rerating,” indicating a change in return expectations for investors.

He noted that while markets have seen volatility, valuations are not at distressed levels. Investors may need to adjust expectations after a long period of strong returns, with performance likely to depend more on earnings trends.

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He also suggested a balanced asset allocation approach, with higher exposure to equities within a neutral range, selective positioning in debt, and continued interest in gold as global conditions evolve.

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