Daily Voice: Mixed Q2FY27 earnings likely amid commodity inflation; Emkay Wealth CIO flags 7 sectors

According to fresh market updates, Ashish Ranawade, Chief Investment Officer at Emkay Wealth Management, believes earnings in Q2FY27 will be mixed as commodity inflation and elevated raw material and energy prices percolate through the economy.

There will be margin pressures, which could lead to a slowdown in expansion and profitability. That stated, the significant depreciation of the Indian indian rupee could bode well for some export-oriented firms, he stated in an interview with Moneycontrol.

Despite challenges such as the rising interest-rate environment and elevated crude prices, Ranawade sees the aerospace, defence, electronics and innovation space, fuelled by import substitution and exports, as an opportunity with a long runway and one that could, for example, deliver good returns. Pharma, speciality chemicals and textiles could additionally be areas where there could be pockets of outperformance, he stated.

Do you think major US sanctions on Russia will additionally be a major concern for India, which is already dealing with a monsoon deficit, triple-digit crude prices, supply-chain disruptions and elevated US bond yields?

The sanctions are likely to be imposed on Russia’s trading partners, and India does have a bilateral trade target of US$100 billion with Russia by 2030, which is at present around US$65 billion odd. This is definitely a matter of concern for India. China-Russia trade is 4x that of India, but given the US dependence on China, they can get away with softer tariffs.

The main question is: with crude prices at such high marks and the supply of crude itself being choked in the Middle East, can the world afford to have Russia’s trading partners being sanctioned, as it will raise the price of oil further up? Or is it what the USA President actually wants? It is getting too complicated.

Are rising US bond yields or elevated crude prices the bigger challenge for equity markets right now?

A rising rate environment and elevated crude prices are definitely a huge challenge for the Indian Economy and the overall markets as a whole. That stated, the Indian equity market is so very well diversified that an active fund manager can find pockets of opportunities for making money.

The whole Aerospace, Defence, Electronics and Innovation space, with import substitution and export as an opportunity, has a long runway and could, for example, deliver good returns.

Pharma and speciality chemicals and textiles could additionally be one area where there could be pockets of outperformance. The more high crude prices impact the world, and the better India can manage its energy security, the more resilient the Indian equity markets will be.

Things are much worse today than they were in March 2026, when the Iran War was at its peak, and yet the Indian equity indices are looking at making new highs.

Do you agree that Indian economic data stays firm despite the energy crisis and the situation in West Asia?

In light of the current high crude prices and the massive choke points in the Middle East, the fact that the Indian Economy has been doing well is remarkable. The depreciating INR has further compounded the energy situation, but we are hopeful that there could be a resolution soon to this crisis.

Do you think investing in midcaps stays challenging, given that several stocks are trading significantly elevated?

I am not so much a believer in investing in firms based on their market capitalization. A savvy investor will look at investment opportunities everywhere and should be able to create a portfolio that is according to his risk profile.

A high Valuation sometimes can additionally be an indicator of things to come in the form of very high expansion, and hence I would not write off a firm just because of its high valuation.

Do you still believe the Q2FY27 earnings season will be firm, similar to Q1FY27, on a weak base and despite concerns over crude prices and the monsoon?

We believe the earnings will be mixed as commodity inflation and elevated raw material and energy prices percolate down into the economy; there will be margin pressures which could lead to a slowdown in expansion and profitability. That stated, the significant INR depreciation could bode well for some of the export-oriented firms.

Can the US The US central bank successfully bring inflation back to its 2 percent target?

It would be very difficult to comment on how things work out in the US given the fluctuating tariffs and unstable trade policies. I believe in opportunities, and even in the US market, in spite of the raging inflation, there are investment opportunities which Indian market participants should seek out in order to provide diversification to their investment portfolio.

Some of these opportunities are unique and could be in firms whose products we use every day. Space, AI and data are just a few of these.