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According to PL Asset Management, the asset management arm of PL Capital Group (Prabhudas Lilladher), while global markets reacted sharply to disruptions in energy supply and shifting monetary policy expectations, Indian equities showed relative stability, underpinned by strong domestic macroeconomic fundamentals, robust liquidity conditions, and continued institutional participation. It highlights that resilient macros and supportive domestic liquidity has cushioned India against any geopolitical headwinds.

However, it warns that India's macro picture could turn adverse as a confluence of risks — rising crude, a weaker rupee, slower global growth, disrupted logistics chains, and tighter global financial conditions — could together push India's fiscal deficit wider, slow GDP growth, and erode the macro tailwinds currently supporting market confidence. PL Asset Management says that this scenario demands vigilance, not complacency.

Escalating geopolitical tensions, particularly US–Israel strikes on Iran in late February, have raised concerns around potential disruptions in the Strait of Hormuz—a critical artery handling nearly 20% of global oil supply—thereby heightening risks to India’s current account and inflation trajectory through elevated crude prices.

Mr. Siddharth Vora, Head - Quant Investment Strategies & Fund Manager, PL Asset Management said, “The evolving global geopolitical landscape is shaping a new world order and a distinctly different macro and market regime, marked by elevated uncertainty, weak global liquidity, and limited earnings visibility. Rising crude and gas disruptions are likely to keep inflation firm, interest rates higher for longer, and pressure fiscal deficits and currency stability, with the rupee remaining vulnerable. While valuations may appear attractive, they risk becoming expensive if earnings are impacted by higher input, energy, logistics, and financing costs.”

Despite these headwinds, PL Asset Management notes that it has delivered consistent outperformance across its portfolio strategies, underpinned by a disciplined, data-driven investment approach that has enabled it to effectively navigate market volatility while continuing to generate alpha. A key highlight has been the sustained performance of the firm’s flagship strategies, particularly its proprietary AQUA (Adaptive Quantitative Unbiased Alpha) strategy. Since inception, AQUA has delivered annualized returns of 22.44%, significantly outperforming its benchmark, the BSE 500 TRI, which returned 15.65% over the same period.

India Macro & Market Update

PL Asset Management highlights that India’s growth momentum continues to remain robust, with Q3 GDP expanding by 7.8% and full-year FY26 growth projected at 7.6%, supported by healthy private consumption growth of 8.7% and a sharp 13.3% expansion in manufacturing.

It expects the India–US tariff reduction, the progress on the India–EU FTA, and the government’s ?12.2 lakh crore infrastructure push under Budget 2026 to boost export competitiveness, unlock new growth avenues, and accelerate the domestic capex cycle, reinforcing India’s medium-term growth outlook.

On inflation, PL Asset Management says that it remains comfortably within the RBI’s tolerance band, providing policymakers with room to maneuver.  In fixed income markets, bond yields have edged higher, with the 10-year G-Sec hovering around 6.70%, largely influenced by global yield movements and elevated supply expectations.

Importantly, it notes that the recent market corrections have created a more favorable valuation backdrop, with the Nifty trading at a 5.6% discount to its five-year average PE, enhancing the medium-term risk-reward for investors. FIIs recorded net outflows of ?6,640 crore, strong countervailing inflows from DIIs to the tune of ?38,423 crore, along with sustained SIP participation, have helped anchor equity markets.

 Sector Rotation

PL Asset Management highlights that sectorally, metals, energy, pharma, industrials, autos, and PSU financials stand out, alongside domestically oriented businesses with relatively insulated growth. Gold remains an important allocation hedge. While near-term volatility may remain high, such corrections typically reset markets and create attractive entry opportunities for long-term investors through calibrated value buying.

Outperformed: Energy · PSU Banks · Defence · Auto · Metals — domestic capex and infrastructure-linked sectors led on government spending and credit growth.

Underperformed: IT (–20%): Sharpest correction since the GFC. Global tech spending uncertainty and AI-driven structural shifts drove the sell-off.

AQUA significantly outperforming the BSE 500 TRI maintaining consistent Quartile-1 rankings across both PMS and mutual fund peer universes 

AQUA delivered +2.31% returns in February 2026, significantly outperforming the BSE 500 TRI (+0.45%), while maintaining consistent Quartile-1 rankings across both PMS and mutual fund peer universes over the 1-, 3-, 6-, and 12-month periods.

The outperformance was driven by disciplined factor positioning, with a strong tilt toward Value (+5.54%), while Low Volatility exposure helped maintain stability during market turbulence. The portfolio maintained a large- and mid-cap orientation (49% large caps, 33% mid-caps), with minimal small-cap exposure (9%) and 8% cash reflecting dynamic cash management.

Sector positioning favored metals, PSU banks, auto, energy and industrials, which outperformed during the month, while underweight exposure to IT and FMCG supported alpha generation.

“In this environment, sentiment remains fragile and both foreign flows and domestic liquidity need close monitoring. Markets are likely to stay reactive to developments in geopolitics and energy prices, with supply chain disruptions persisting. Navigating this cycle requires sharp sector selection and disciplined risk and cash management, with a preference for large caps and factors such as value, quality, and low volatility”, added Siddharth Vora

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