'Fear in headlines, opportunity in markets...' — Motilal Oswal’s Raamdeo Agrawal on investing amid uncertainty

Veteran investor and Motilal Oswal Financial Services co-founder Raamdeo Agrawal has said that global markets, including India, are showing remarkable resilience despite rising tensions in West Asia, high crude oil prices and fears of inflation.

In a detailed interaction with Zee Business Managing Editor, Anil Singhvi, Agrawal said investors should remain patient and continue focusing on long-term growth opportunities, as India’s economic fundamentals remain strong.

He noted that stock markets across the world are near record highs even as geopolitical tensions involving Iran and the broader West Asian region continue to create uncertainty.

“Markets are ignoring most of the fears because businesses and corporate earnings are still doing well,” Agrawal said. “The fear visible in headlines is much larger than the fear reflected in markets.”

According to him, India’s benchmark indices have remained stable despite concerns over crude oil prices, currency weakness and foreign investor selling.

Strong Domestic Indicators Supporting India

He pointed out that mutual fund inflows continue to remain robust and high-frequency economic indicators such as automobile sales and GST collections are also strong.

“The real economy is in good shape,” he said, adding that inflation in India remains relatively manageable compared to several global economies. At the same time, Agrawal warned that if geopolitical tensions continue for a prolonged period, crude oil prices could remain elevated and create inflationary pressure globally.

“If oil prices stay high for a long time, the world may have to adjust to lower availability and reduced consumption,” he said. “That will naturally push prices higher and create inflation.” However, he expressed confidence that the current crisis would not become permanent.

“The world has abundant oil resources. Eventually, oil prices can return to lower levels, but nobody knows exactly when,” he added.

Government Preparing for Prolonged Uncertainty

On the Indian government’s recent economic measures, including higher import duties on gold and silver, Agrawal said policymakers appear to be preparing for a longer period of global uncertainty.

“The government is taking precautionary steps because these conflicts are not ending quickly,” he said. “Modern wars and geopolitical stand-offs can continue for months or even years.”

Agrawal stressed that India must continue to remain attractive for global capital, especially at a time when foreign exchange reserves and currency stability are important.

“India needs foreign capital and should create one of the most attractive capital markets in the world,” he said. He suggested that India should consider making its tax regime more competitive for foreign investors.

“If other countries are offering better conditions, India must also remain globally competitive,” he added.

Growth Momentum More Important Than Fear

Despite recent selling by foreign institutional investors (FIIs), Agrawal said he is not overly worried because India’s long-term growth story remains intact.

“India is growing at 7-8 per cent while inflation is relatively under control. Very few large economies are delivering that combination,” he said.

He also argued that maintaining economic growth is more important than excessively worrying about moderate inflation. “Growth momentum should not slow down. Even if inflation rises slightly, growth must continue,” he said.

On investment strategy, Agrawal said he continues to favour sectors linked to structural domestic growth themes. He mentioned electric vehicles, digital lending, energy transition, data centres and quick commerce as areas that could create significant long-term wealth.

Preference for Domestic-Focused Companies

At the same time, he said he has become relatively more cautious on pure export-oriented companies because of growing geopolitical uncertainty and changing global trade dynamics.

“A domestic-focused company with predictable growth may now be safer than a company fully dependent on exports,” he said.

According to him, businesses serving the Indian economy directly are likely to benefit more from government policies and domestic consumption trends.

Speaking about market valuations, Agrawal said Indian equities are not excessively cheap, but they are reasonably priced considering long-term earnings growth potential.

“If earnings grow 15-17 per cent annually and return ratios remain healthy, current valuations are acceptable,” he said. He added that India could continue delivering strong growth for decades if the country maintains its development momentum.

“There is no reason why Indian indices cannot multiply several times over the next 10 to 20 years,” he said.

Midcaps, Earnings Growth and Long-Term Wealth Creation

Agrawal also highlighted the resilience shown by Indian markets during recent corrections. “Even after multiple global concerns, markets did not collapse sharply. That itself reflects the strength of the economy,” he said.

He expressed optimism about the next 12 months and said investors with patience could see meaningful upside in equities. “The next year could be very exciting for markets,” he said. “Returns can be significantly better once geopolitical tensions ease.”

On mid-cap and small-cap stocks, Agrawal said earnings growth in these segments is currently much stronger than in several large-cap companies.

He observed that many large technology and banking stocks have delivered relatively flat earnings recently, while several mid-sized firms continue to report robust growth.

“Markets ultimately reward earnings growth,” he said. “Growth companies bought at reasonable valuations continue to create wealth,” Agrawal advised investors to stay focused on long-term wealth creation instead of reacting emotionally to short-term uncertainty.