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West Asia Conflict Raises Risks for Indian Corporate Earnings
A market expert says a longer conflict in West Asia could make it harder for Indian companies to earn money.
Higher crude oil prices could raise costs for businesses.
Investors are also worried about US tariffs, artificial intelligence and other geopolitical problems.
Foreign investors have sold a large amount of Indian stocks.
India’s main stock index has performed worse than some major overseas indexes this year.
Nomura still expects the Nifty50 to reach 25,900 by March 2027.
However, the expert says investors should not pay any price for a company’s shares.
He sees opportunities in some banks, pharmaceutical companies, IT services and auto-parts makers.
He is less positive about large consumer-goods companies because their shares remain expensive and online competition is changing the market.
Nomura’s Saion Mukherjee says a prolonged West Asia conflict could increase risks to corporate earnings.
Foreign portfolio investors withdrew Rs 1.66 lakh crore from Indian equities and sold another Rs 2.50 lakh crore in 2026 through September 29.
The BSE Sensex has fallen more than 14% in 2026, while the S&P 500 and Nikkei 225 gained 12% and 26%, respectively.
Nomura retained its Nifty50 target of 25,900 for March 2027 but expects investors to accept lower valuations amid uncertainty.
Mukherjee favors selective exposure to financials, pharmaceuticals, IT services and competitive auto-ancillary companies, while remaining bearish on consumer goods.
- Who
- Nomura analyst Saion Mukherjee and foreign portfolio investors in Indian equity markets.
- What
- Mukherjee warned that a prolonged West Asia conflict and other uncertainties could increase risks to corporate earnings and reduce acceptable valuations.
- Where
- India’s equity market, with comparisons to the United States and Japan.
- When
- The assessment concerns the current market environment; FPI data cited runs through September 29, 2026, and Nomura’s target is for March 2027.
- Why
- Crude oil prices, geopolitical uncertainty, US import tariffs, AI-related disruption and renewed foreign-investor selling are weighing on market sentiment and earnings expectations.
Risks and caution
Selective opportunities
Overall market outlook
Risks and caution
A prolonged West Asia conflict, higher crude oil prices, US tariffs and AI disruption could hurt earnings and justify lower valuation multiples.
Selective opportunities
Nomura has retained its Nifty50 target of 25,900 for March 2027, although investors should remain selective.
Technology and AI
Risks and caution
Investors fear that AI and automation could significantly affect software-services companies, which have already undergone a major correction.
Selective opportunities
Mukherjee remains constructive on IT services, expecting volumes to improve as enterprises adopt AI more extensively.
Sector preferences
Risks and caution
Large consumer-goods companies remain vulnerable because valuations are rich, online competition is disruptive and a poor monsoon could weaken consumption.
Selective opportunities
Financials, pharmaceuticals and selected globally competitive auto-ancillary companies offer more valuation comfort; private-sector banks are particularly attractive.
Key facts
- Nomura Nifty50 target
- 25,900 for March 2027
- Foreign outflows before 2026
- Rs 1.66 lakh crore from India’s equity market
- Foreign outflows in 2026
- Rs 2.50 lakh crore through September 29
- September 2026 FPI activity
- Foreign investors sold Rs 25,662 crore of Indian stocks
- BSE Sensex performance
- Down more than 14% year-to-date in 2026
- Comparison markets
- The S&P 500 rose 12% and the Nikkei 225 gained 26% over the same period
- Preferred areas
- Financials, pharmaceuticals, IT services and selected auto-ancillary companies
Quotes
Saion Mukherjee
Nomura analyst discussing stock selection and valuations
“We are going through a deflationary pressure in IT services because of AI, but as enterprises use AI in a much bigger way, you would see volumes for IT services pick up.”
businesstoday.in
“You cannot buy a good company at any price. That's very clear to us. You have areas like financials, pharmaceuticals, where the valuations are not very high.”
businesstoday.in
Sources
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