• Global stagflation risks: Prolonged Middle East conflict and surging oil prices could spur global inflation, fertilizer shortages, and reduced economic growth, complicating interest rate cuts as fiscal deficits rise.
• RBI currency measures: Capping banks' overnight open dollar positions at $100 million is expected to bring back roughly $30 billion, supporting the rupee and cooling bond yields amid current account deficit pressures.
• Market valuation outlook: Nifty valuations have corrected to attractive levels below approximately 19 times, with Indian manufacturing in automotive, defense, and electronics showing resilience against global slowdowns.
• Asset allocation strategy: Investors are advised to accumulate diversified mutual funds—including flexi cap, multi cap, multi-asset allocation, and balanced advantage funds—to navigate volatility instead of taking sector-specific bets.