Oil shock manageable, prefer large caps on valuations: DSP MF CIO

Anish Tawakley, Chief Investment Officer (CIO) at DSP Asset Managers, said the recent surge in crude oil prices is likely to be temporary and should be handled carefully to limit its impact on the domestic economy.Speaking on the macro outlook, Tawakley said, “The thing to focus on is, do we think this is a temporary move… my view is it’s temporary,” indicating that the current spike may not alter long-term economic fundamentals.

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He suggested that policymakers should manage the shock through reserves and calibrated price transmission. “We should transmit only as much as can be absorbed without hurting economic output,” he said, adding that a limited fuel price increase may be manageable without affecting growth.
Tawakley noted that India’s economic fundamentals remain stable over a one-year horizon, provided the disruption remains short-lived. He said the broader environment continues to support demand and capacity.Also Read | BofA sees 9% Nifty upside over the year; energy security a multi-decade theme for India

From an investment perspective, he advised focusing on companies with strong balance sheets that can withstand near-term volatility. He also maintained a preference for large-cap stocks over small and mid-caps, citing valuation concerns in the latter.

On sectors, Tawakley highlighted domestic cyclicals such as banks, autos and cement as areas of interest, while advising caution on segments like personal lending and fast-moving consumer goods (FMCG) due to potential earnings pressure.

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