Indian equities have spent June lurching between relief and unease, caught between an Iran ceasefire that keeps unravelling and reknitting itself, and a domestic earnings season still finding its feet. Yet according to Manish Gunwani, CIO – Equity at Bandhan AMC, investors worrying about a market top may be asking the wrong question.
“Long-term equity returns are converging to around 6 to 6.5 per cent above inflation,” Gunwani says. “Current valuations are fair, not distressed.” It is a calibrated view rather than a bullish call, but in a market that has spent the better part of a year flinching at every headline from the Gulf, calibration itself counts as reassurance.
The headlines have been real enough. Brent crude swung past $120 a barrel in March as the Strait of Hormuz, the channel carrying roughly a fifth of the world’s oil, was effectively shut by the Iran-Israel-US conflict. The rupee slid past 95 to the dollar in the chaos, and Nifty IT bore the brunt of risk-off selling. A US-Iran memorandum of understanding signed in mid-June has eased the immediate panic, even as flare-ups over Lebanon keep traders on edge and Brent has settled back into the $78 to $82 range.
Gunwani’s reading of the global economy through this turbulence is notably composed. “The global economy has proven more resilient than the initial energy-shock fears suggested, helped substantially by AI-driven capital expenditure,” he notes. That capex wave, he believes, is one of two forces that will shape sector winners over the next several years, the other being the deepening US-China geopolitical friction reshaping supply chains worldwide.
On the rupee, Gunwani sees the worst as behind it. “Pressure from foreign outflows and energy costs is easing. As import costs cool, there is room for the rupee to stabilise, even appreciate slightly.” That view sits alongside a broader liquidity argument: with government debt elevated globally, monetary policy is likely to stay loose, keeping structural liquidity supportive for risk assets. Domestically, he adds, equity is gaining an edge almost by default, as enthusiasm for real estate and gold cools.
Earnings remain the swing factor. “Provided the conflict doesn’t re-escalate, we are looking at earnings growth of around 15 per cent for the coming fiscal year, with no major downgrades visible right now,” Gunwani says. That would mark a meaningful improvement after a stretch in which Indian EPS revisions had lagged emerging-market peers.
Within the market, Gunwani’s highest conviction sits furthest down the cap curve. “Small caps are the most interesting space on a three-to-five-year view. That is where you get the best ability to play extreme change and access genuinely distressed valuations,” he says. He pairs this with a preference for manufacturing and global capex plays, including defence and energy security infrastructure, themes he ties directly to supply chain reordering and the AI buildout.
Indian IT services draws his most cautious comment. “There’s a real risk of AI-led disruption to the services model, and global IT peers are trading at lower valuations than Indian players,” Gunwani says, a view that has echoed through recent brokerage downgrades on the sector citing similar concerns.
Taken together, it is a portfolio of conviction calls rather than a single macro bet: patient on the index, selective within it, and willing to look past the geopolitical noise that has dominated headlines through 2026. As Gunwani puts it, the bigger picture has not changed even though the news cycle has been relentless. As he describes it, the structural drivers, AI capex, supply chain realignment and domestic liquidity, are intact. The volatility, then, seems to be in the headlines, not in the fundamentals.
