Daily Voice: DSP's Anil Ghelani flags earnings hit if oil supply blockade persists

Anil Ghelani is the Head of Passive Investments and Products at DSP Investment Managers

• Iran war impact on March 2026 quarter earnings could be relatively low
• See major earnings hit if de-escalation is delayed and oil supply routes remain shut
• Believe that a sustained oil price above $100 might not be base case, prices could stabilise lower soon

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According to Anil Ghelani, the Head of Passive Investments and Products at DSP Investment Managers, the impact of the Iran war on the March 2026 quarter earnings could be relatively low because the escalations started towards the end of the quarter.

More important is to look beyond March. "If we don’t see a quick de-escalation and opening up of the sea routes, there could be a major negative impact," he said in an interview with Moneycontrol.

He believes once the immediate US-Israel-Iran conflict cools down, a positive move in equity markets is surely possible, but it might not be a “sharp” rally.

Do you believe crude oil will stabilise below $100 a barrel soon despite the volatility and continuation of Middle East tensions?

During 2022, the Russia/Ukraine conflict forced crude oil to $120–130 levels, and we could see it again, but maybe temporarily. If we look through the current price move and analyse the demand-supply fundamentals, as of now, the oil price rise is mainly due to a “supply chain issue” and not a “supply issue.”

While no exact number can be put out, estimates indicate a comfortable supply of oil with reasonably large inventories. Based on these supply dynamics, I believe that a sustained price above $100 might not be the base case, and we could soon see prices stabilising lower.

Will the Iran war have any major impact on the March-quarter earnings and economic growth numbers?

Our corporate earnings as well as economic growth numbers are very sensitive to rising energy prices. The impact on the March 2026 quarter earnings could be relatively low because the escalations started towards the end of the quarter. Many sectors with very high crude oil sensitivity, such as airlines, logistics, paints, etc., as well as certain companies having large turnover or business dealings with countries in the West Asia region, would surely see some immediate pressure on margins.

More important is to look beyond March. If we don’t see a quick de-escalation and opening up of the sea routes, there could be a major negative impact.

Do you believe the earnings recovery will remain intact despite these short-term concerns?

The key drivers of our economy have been domestic consumption-led growth and government capex spending. While sudden geopolitical escalations and supply chain disruptions surely make business difficult, they might not structurally change some of the growth drivers.

So, on a broader level, we could see most corporate balance sheets as well as our country’s macroeconomic fundamentals remaining strong.

Do you think an interest rate cut is unlikely in at least the next couple of meetings if the current market scenario persists?

Even if we ignore the recent oil shocks and simply analyse the last policy meeting notes, the RBI indicated that it will assess the new inflation series announced in January 2026 before any rate action.

With higher prices of crude oil, we have a big risk of inflation rising very swiftly. This would be the focus area before deciding on any rate cuts for the next couple of meetings.

Do you think the markets appear to be pricing in a potential near-term end to the war? Does this mean a sharp rally could occur toward the end of March?

Our core behavioural biases often make us focus on the best-case resolution. The fact that over the past few days we have not seen any significant corrections does suggest that many investors are assuming things will not worsen. So, once the immediate conflict cools down, a positive move is surely possible, but it might not be a “sharp” rally.

Is this the right time for medium-term investors to recalibrate their portfolios?

Often, we say that corrections can be a celebration. During times of sharp moves, there is an urge to change our investment view. But I strongly feel that it should not trigger any structural changes.

However, such times are always a good excuse to set up a periodic review meeting with your trusted financial advisor and ensure your investments continue to be aligned with your financial plans linked to your life goals.

Which sectors would you prefer to focus on, especially after the recent sharp correction?

I find it useful to look at broad equity markets with the CoFE framework, where Co stands for corporate earnings, F for flows, and E for event risks. Even after the current correction, many pockets of the markets still appear expensive when looking at the Co part, i.e., valuations relative to corporate earnings.

So, I would continue to remain cautious on sectors with high exposure to global commodity volatility. After the recent correction, once the E part, i.e., event risks, starts reducing, some sectors like private banks, large-cap IT, and healthcare would start looking very attractive.