--- title: "Kotak Equities flags geopolitical risks even as Q4 earnings hold steady" type: "News" locale: "en" url: "https://longbridge.com/en/news/285312378.md" description: "Kotak Institutional Equities highlights geopolitical risks impacting India's macroeconomic outlook, particularly due to the unresolved West Asian conflict and potential weak monsoon effects. While Q4 earnings for FY26 have largely met expectations, the brokerage warns of rising valuations in certain sectors. The market is expected to focus on earnings momentum and macroeconomic trends following recent state elections, with a relatively election-free period ahead allowing the government to address economic challenges. Overall, Indian corporate earnings may withstand geopolitical tensions better than the broader economy." datetime: "2026-05-06T04:57:29.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/285312378.md) - [en](https://longbridge.com/en/news/285312378.md) - [zh-HK](https://longbridge.com/zh-HK/news/285312378.md) --- # Kotak Equities flags geopolitical risks even as Q4 earnings hold steady India's macroeconomic outlook remains under pressure in the near term, with Kotak Institutional Equities pointing to the absence of a durable resolution to the West Asian conflict as a key overhang. The brokerage noted that negotiations between Iran and the US have yielded no meaningful progress over the past week. While Kotak continues to hold its base case of a short conflict lasting a few weeks, it flagged a rising probability of a prolonged standoff stretching over months — one that could keep crude oil prices elevated for an extended period. Adding to the concern, the brokerage warned that the possibility of a weak monsoon could further strain both growth and inflation dynamics in the months ahead. With the recent round of state assembly elections now behind it, the market is expected to shift its attention firmly toward earnings and geopolitical developments. Elections across Kerala, Tamil Nadu and West Bengal resulted in a change of political leadership, yet Kotak does not expect these outcomes to materially alter the central government's administrative or legislative agenda. Challengers unseated incumbents in three of the four states that went to polls, with TVK's performance in Tamil Nadu and BJP's showing in West Bengal coming in well ahead of exit poll projections. Even so, the brokerage believes markets will train their focus on earnings momentum and macroeconomic trends from here. It also pointed out that India is now entering a relatively election-free stretch over the next several months — a window that could allow the central government to address near-term economic softness while building medium-to-long-term capacity. On the earnings front, the ongoing fourth-quarter results season for FY26 has largely tracked expectations, with only marginal downgrades to both Kotak's own estimates and broader consensus numbers so far. Underlying trends across most sectors have held up with reasonable resilience. The brokerage noted that Indian corporate earnings could weather a prolonged geopolitical conflict better than the broader economy, given the current composition of the market's earnings base. On valuations, Kotak said Indian markets remain in fair territory relative to recent history and prevailing bond yields. However, it sounded a note of caution on select consumption and investment-linked stocks, where the recent rally has pushed valuations into expensive terrain. Outsourcing and financial stocks, by contrast, continue to sit in the inexpensive-to-fair range. The brokerage also flagged that narrative-driven stocks have seen sharp re-ratings, fuelled by a renewed wave of retail investor enthusiasm in select pockets of the market. ### Related Stocks - [IBN.US](https://longbridge.com/en/quote/IBN.US.md) - [IND.US](https://longbridge.com/en/quote/IND.US.md) - [PIN.US](https://longbridge.com/en/quote/PIN.US.md) ## Related News & Research - [India proposes interim cash settlement to boost liquidity in agri derivatives](https://longbridge.com/en/news/286101833.md) - [Indian regulator clarifies banks, brokers not liable for offshore funds' tax dues, sources say](https://longbridge.com/en/news/286253948.md) - [Stocks Mixed as Crude Oil Prices and Bond Yields Fall](https://longbridge.com/en/news/286785122.md) - [Assessing Dow (DOW) Valuation After Recent Share Price Momentum And Cost Reduction Plans](https://longbridge.com/en/news/286807023.md) - [Analysis-Bond yield spike is risk to unprepared equities market, investors warn](https://longbridge.com/en/news/286669706.md)