Equity Strategy - India: Riding the storm: Navigating geopolitical volatility (Part 2)

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Equity Strategy - India: Riding the storm: Navigating geopolitical volatility (Part 2)

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Equity Strategy - India

Riding the storm: Navigating geopolitical

volatility (Part 2)

Equity Strategy

Prolonged volatility likely as risks unfold 08 June 2026

We had cut our FY27 Nifty earnings growth to 8.5% YoY (vs street’s 14%) in early April Equity Strategy

(see note: Reasonable or a bargain?) on the back of earnings risks that the prolonged India

conflict poses given its impact on India’s macro & spike in commodity targets. Further, Amish Shah, CFA >>

while govt has taken measures to contain fiscal deficit through recent fuel price and Research Analyst

gold import duty hikes, our economics team expects fiscal deficit to inch up to 5% of BofASshah.amish@bofa.comIndia

GDP (vs 4.5% pre-conflict) in FY27. We believe fiscal pressure (Rs1.5tn fuel excise duty Udit Dhekale >>

cut, Rs0.4tn fertilizer subsidy) could be funded through fiscal deficit or potential cuts to Research Analyst

capex. In this note, we outline screens to navigate current volatility of either a near-term BofASudit.dhekale@bofa.comIndia

resolution of the conflict or a continued standoff. Separately, we provide screens for Manya Kakkar >>

stocks that one might navigate cautiously as well as those that may perform well Research Analyst

irrespective of the geopolitical outcome. BofASmanya.kakkar@bofa.comIndia

Scenario 1: Sectors to benefit from a resolution RithikResearchDhimanAnalyst>>

With trade flows disrupted and crude/natural gas prices up, several sectors have BofASrithik.dhiman@bofa.comIndia

corrected, most importantly those linked to a) energy: downstream energy, fertilizers,

gas utilities, tyres, b) fuel price increase: commercial vehicles, cement, airlines, alcoholic