Taher Badshah, president and CIO, Invesco India Multicap Fund shares his views on the current markets and how his fund house is positioning its portfolio to benefit from the recent war while talking to Kushan Shah.
Following the ceasefire in the US-Iran conflict, how do you assess its medium-term impact on the Indian economy and markets?
Currently, it looks like the perpetual ceasefire is likely to hold and the countries will continue with the negotiations. The biggest impact at this stage from an economic standpoint is the energy cost across oil as well as the natural gas. Oil is a well-supplied market so once the war fades into the background and negotiations continue, prices will come back in the $70-$80 region again.
However, the gas supplies are not as high as oil due to which there could be some issues. So, on a net basis, I don’t think the energy cost related impact of this war will extend throughout calendar year 2026 or FY27. As far the impact on the markets is concerned, the earnings might be impacted between 2-5%. So, from about 15% earnings expectations, we could see growth of about 10-12%.
Do you see FPI selling stopping anytime soon and foreign investors coming back to Indian markets?
We think the FPI sell-off has already started to ease off. While the sell-off was very high in 2025, it was virtually zero in January and February before the war due to the earnings outlook of Indian markets looking better. If the war does not go on any further, it is possible that foreign investors start taking a far more positive view on India from the second half of the year.
The key markers like earnings growth, inflation and currency stability are looking better now. The oil prices coming down could also give a boost to foreign investment. Additionally, the foreign ownership of Indian equities has come down on an absolute and relative basis, so there could be some reversion to the mean. It would not rise suddenly but it may not be as bad as in the last 1-2 years.
How is your fund house positioning its portfolio in the current market?
If the West Asia war fades into the background, we can see relatively better earnings not just in FY27 but also in FY28. If there is an expectation of double-digit earnings growth by the end of 2026, we could go in that direction. We may get upside in earnings this year from banking, industrials, healthcare and parts of consumption and next year, hopefully, the technology sector can make a comeback.
We have not changed our positioning dramatically in the last 3-4 months and fine-tuned our portfolio in segments like parts of consumer durables, healthcare, industrials and BFSI. We have also plugged some gaps in our portfolio due to the buying opportunities as a result of the war in sectors like commodities, some areas of domestic cyclicals, commercial vehicles, cement etc. We have also bought in some of our older positions where there has been a major correction.
How do you see the valuations in companies which have entered the market in the last 1-2 years?
It would be difficult to give a generalized picture on the newly listed businesses. We have been selective while participating in IPOs and focused on key parameters like competitive advantages like low entry barriers, profitability and hygiene factors like corporate governance. Our approach has been to stay invested in businesses which we select and even add them to more strategies.
How do you look at valuations in a market like India?
If one sees valuations as only buying cheap, then it is difficult in India as we are relatively expensive. However, there are situations where due to a change in the growth trajectory, the companies become either overvalued or undervalued. Most of the times, we look at businesses facing temporary headwinds in growth which are punished by the markets and in such a situation, valuations are looked at.
Which segments do you find attractive in the current market?
Besides the ones mentioned before, there are some segments which we like over a long-term as thematic bets like healthcare, non-lending portions of financials like capital markets, wealth management, brokerage, defense, roadways, travel and tourism.