Why BofA takes a contrarian call cutting India’s earnings estimates for second time in a row?

Mint, he said crude prices have risen and that some energy infrastructure assets in West Asia have been affected by the war. Even if tensions ease, supplies are unlikely to return to pre-war levels soon, keeping prices elevated for longer.

This is also expected to affect growth and keep commodity prices, including aluminium and copper, elevated.Brent crude oil prices have shot up by over 42% since the war broke out at the end of February.Given this, he saw little point in waiting for May earnings announcements and said the brokerage is instead building in more realistic estimates now to arrive at revised price targets.“So, the first round of cuts we took was immediately after the conflict started. The conflict began on 27 February, and we cut our earnings on 2 March in anticipation that crude and commodities prices would spike.

Now, with clear evidence that crude and commodity prices have already increased, we are incorporating that into our estimates and more accurately pricing in the impact, and that is why we have taken a second cut,” he said.The brokerage has cut its 2026-27 Nifty earnings growth further to 8.5% year-on-year, down from 11% in early March and 14% pre-war. “Consequently, we are now significantly below consensus at 15% on-year,” BofA Securities’ 6 April report said.Shah said a prolonged war remains the biggest risk factor for equities, even now.Since the war in West Asia began, the Nifty 50 and S&P BSE Sensex have slumped by around 9% each, while the Nifty Midcap 100 and Nifty Smallcap 250 have fallen by 8% and 6%, respectively.“If the conflict ends, there is scope for about a 15% upside from current levels.