Daily Voice: Why Baroda BNP Paribas MF's Jitendra Sriram is betting on utilities, healthcare, and consumer stocks in a turbulent market

Jitendra Sriram is the Senior Fund Manager at Baroda BNP Paribas Mutual Fund

• If Iran conflict continues on a slow boil, there would need to be a monetary reset
• Q4FY26 earnings may not see material impacts of ongoing Middle east crisis
• New normal for crude likely to be $15-20 per barrel higher than earlier

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Considering the escalating West Asia tensions, Jitendra Sriram, the Senior Fund Manager at Baroda BNP Paribas Mutual Fund believes it is logical to assume that hostilities may not be long lasting but crude could stay higher for longer.

In this scenario, "we would prefer exposure to areas such as utilities (domestic oriented, expectation of a warmer summer), healthcare and also parts of consumer," he said in an interview to Moneycontrol.

According to him, near term markets have more headwinds than tailwinds to contend with. "Strong crude continuing even for 3 months may likely shave off 20-30bps off GDP growth. Expectation of policy easing into CY2026 may need to be tempered, if CPI moves above the RBI median target of 4%," he said.

Is this an excellent time for long-term investors to buy? Which sectors would you advise investors to accumulate amid the current market turmoil?

Markets are clearly in an uncertain frame given the breakout of hostilities in Iran. What is most critical from an India point of view is the “new normal” for crude. Iran may have seen some supply disruptions but more importantly drone attacks by Iran in the region has disrupted refinery outputs in the region.

To that extent, it is logical to assume that the new normal may be $15-20 a barrel higher than the recent past which has implications for growth, inflation expectations, current account deficit (and thereby the INR) and market earnings.

It is logical to assume that hostilities may not be long lasting but crude could stay higher for longer. In this scenario, we would prefer exposure to areas such as utilities (domestic oriented, expectation of a warmer summer), healthcare and also parts of consumer.

Do you think most of the bad news has already been priced in? Does this mean the market downside is limited from here while the upside could be potentially higher in FY27?

It is very difficult to take a call on this as barring the principal actors in this conflict (US, Iran & Israel), the estimated duration of this conflict is difficult to pinpoint. We have already seen how optimistic commentaries on Ukraine – Russia suggested early cessation, but the conflicts continue to simmer till date. The longer Iran situation continues, the longer crude and supply chains will remain tight leading to a slower global growth, marginally elevated inflation expectation and thereby weaker earnings growth.

Longer term, corrections have typically been good periods for patient long term investors to accumulate stocks and once the conflict is over, markets would see a major sentiment boost. Whether that event happens round the corner or the newsflow (crude price etc) turns worse before getting better is anybody’s guess. Instead of forecasting outcomes which is akin to throwing darts at a dartboard, we try to build possibilities (say crude price) versus impacts.

What are the key challenges for the market in the new financial year? Do you expect headwinds to outweigh tailwinds?

Near term markets have more headwinds than tailwinds to contend with. Strong crude continuing even for 3 months may likely shave off 20-30bps off GDP growth. Expectation of policy easing into CY2026 may need to be tempered, if CPI moves above the RBI median target of 4%. *Though Q4FY26 may not see material impacts on corporate earnings due to inventory in the system an elongated conflict could impact EPS growth by a few percentage points. (*source – MoneyControl, February 05, 2026)

Do you expect geopolitical tensions to persist in FY27? If yes, does that mean oil prices may remain elevated?

A very near term resolution to the Iran conflict and strait of Hormuz disruptions appears unlikely. These supply chain disruptions may fester for a couple of months. Also release of strategic oil reserves by some countries to douse the crude price surge is not permanent but tactical and at some future point, there is likely to be restocking demand of such reserves too. As it appears currently, in our view the new normal for crude is likely to be $15-20 per barrel higher than earlier.

What are your expectations from Q4 earnings, especially amid the ongoing Middle East crisis? Do you see a limited impact of the Iran conflict and higher oil prices on FY27 earnings?

Q4FY26 may not see material impacts of the ongoing Middle east crisis on account of the usual 30-45 days inventory corporates tend to hold and impact if any, will be restricted to first order impacts such as oil marketing companies (OMC’s). A continuation will lead to second order impacts impacting a larger proportion of industry for eg restrictions on LNG availability for industrial users to ~80% may impact production for user industries such as tiles, autos etc.

It will be increasingly difficult for OMC’s to hold on to auto fuels prices and price increases will lead to higher freight costs impacting inflation dynamics. Consumers may need to alter their consumption baskets to adjust for these increases by shaving off on other areas impacting demand. In our view, a 3 month disruption could shave off earnings growth by 2-300bps.

What is your view on the upcoming Federal Reserve policy meeting and Chair Powell’s commentary?

US Fed has held rates steady in the current March meeting largely citing the Iran situation as being fluid. A large determinant of monetary policy both at the Fed and the RBI will be the impact of crude/gas prices and price increases due to supply chain disruptions. If the conflict continues on a ‘slow boil’ there would need to be a monetary reset. Both for the US and India, the markets were pricing in rate cuts over the course of CY2026. These assumptions would be seriously tested if CPI continue to be stronger for longer.

Do you think tariff-related concerns have now completely taken a back seat?

Your observation is correct. Post the US Supreme Court ruling, India does not have any relative disadvantage versus others on tariffs so at the margin it is not news anymore. Even if we were to assume that the US administration reverts to the earlier trade deals signed, it does not have any meaningful relative disadvantage for India so either case that doesn’t seem to be a burning issue anymore.