Anupam Tiwari, Head of Equities at Groww Mutual Fund, warns that rising crude oil prices and geopolitical tensions may hinder India’s corporate earnings recovery. He cautions that strong domestic investment inflows cannot sustain current high stock valuations if company profits fail to grow as expected.
As India heads into the September 2026 quarter earnings season, the combination of high crude oil prices and geopolitical volatility in West Asia has become a major concern for market analysts. Anupam Tiwari, Head of Equities at Groww Mutual Fund, has highlighted that these energy costs are creating a significant hurdle for Indian companies, potentially threatening their ability to maintain profit margins.
India remains heavily dependent on energy imports, sourcing about 85% of its crude oil requirements from global markets. When oil prices remain elevated—often trading above $100 per barrel—it forces companies to pay more for logistics, raw materials, and energy. This rise in input costs usually eats into profit margins, making it difficult for businesses to maintain the earnings growth that investors have become accustomed to.
While domestic investors have shown immense confidence in the market through steady Systematic Investment Plan (SIP) inflows, Tiwari points out a disconnect between market prices and actual company performance. He warns that domestic buying power alone cannot keep stock valuations high if the underlying earnings growth does not justify those prices. If company profits remain subdued or decline due to high costs, the market could face a period of stagnation.
The broader economic environment also adds to the complexity. Persistent inflation, driven partly by energy costs, puts pressure on the Reserve Bank of India to manage interest rates cautiously. If inflation stays sticky, borrowing costs for companies may remain high, further impacting cash flow and business expansion plans. Additionally, the market has been grappling with outflows from foreign institutional investors and the depreciation of the Indian rupee, both of which add layers of risk for equity indices.
For investors navigating this environment, the advice emphasizes the importance of caution and diversification. While structural growth stories in sectors like manufacturing and technology continue to offer long-term potential, experts suggest that relying on a single strategy may be risky. Instead, using multi-asset or hybrid funds could help balance the portfolio against the current market volatility.
Investors should closely track the upcoming quarterly financial results for signs of margin pressure across sectors that are highly sensitive to energy prices, such as manufacturing and transport. Monitoring global crude oil price trends and management commentary on demand and pricing power will be essential to understanding whether companies can pass on these increased costs to consumers or if profitability will continue to face pressure.