Invasset

𝗜𝗻𝗱𝗶𝗮'𝘀 𝗝𝗲𝘁 𝗙𝘂𝗲𝗹 𝗦𝗵𝗼𝗰𝗸: 𝗪𝗵𝗲𝗻 𝗔𝘃𝗶𝗮𝘁𝗶𝗼𝗻 𝗕𝗲𝗰𝗼𝗺𝗲𝘀 𝗮 𝗠𝗮𝗰𝗿𝗼 𝗦𝗶𝗴𝗻𝗮𝗹

India's aviation sector is in the middle of a serious jet fuel squeeze — and this isn't just an airline problem anymore. It's quietly turning into a signal for travel demand, inflation, route economics and consumer spending.

Here's why fuel matters so much. 𝗔𝘃𝗶𝗮𝘁𝗶𝗼𝗻 𝗧𝘂𝗿𝗯𝗶𝗻𝗲 𝗙𝘂𝗲𝗹 (𝗔𝗧𝗙) 𝗺𝗮𝗸𝗲𝘀 𝘂𝗽 𝟯𝟬–𝟰𝟬% 𝗼𝗳 𝗮𝗻 𝗮𝗶𝗿𝗹𝗶𝗻𝗲'𝘀 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗰𝗼𝘀𝘁𝘀. And because most big-ticket expenses — fuel, aircraft leases, maintenance, foreign loans — are dollar-linked, airlines get hit twice: once by global crude prices, again by a weaker rupee. ICRA has already turned negative on Indian aviation, citing high ATF prices, post-West Asia airspace disruptions and rupee depreciation.

The damage is already showing up. Air India has trimmed its April–May schedule and warned of more cuts through June and July, with its CEO admitting that fares can only be pushed so far before demand simply breaks.

International carriers are pulling back too — Qantas is suspending its Sydney–Bengaluru flights from August through October, and Thai AirAsia has slashed capacity on India routes. According to ET Infra, 𝗱𝗼𝗺𝗲𝘀𝘁𝗶𝗰 𝗳𝗮𝗿𝗲𝘀 𝗼𝗻 𝘀𝗰𝗵𝗲𝗱𝘂𝗹𝗲𝗱 𝗿𝗼𝘂𝘁𝗲𝘀 𝗮𝗿𝗲 𝘂𝗽 𝗮𝘀 𝗺𝘂𝗰𝗵 𝗮𝘀 𝟮𝟱%, while international flight fuel costs have doubled since March.

Policy is doing what it can. On May 1, ATF for international airlines was raised by $76.55 to $1,511.86 per kilolitre, while domestic ATF was held steady at ₹1,04,927.18 per kilolitre — with oil marketing companies absorbing part of the hit to shield airlines and passengers.

But absorbing isn't eliminating. Someone in the chain still pays — airlines through thinner margins, passengers through higher fares, oil companies through under-recoveries, or the wider economy through inflation.

That's why this story is bigger than aviation. India's flying demand is structurally strong, but it isn't infinite. FY26 domestic passenger traffic grew just 1.4% year-on-year to 1,677.4 lakh passengers, and March was up only 1%. When fares climb sharply, the first casualties are discretionary travel, tourism, student movement and Gulf-bound family trips.

𝗧𝗵𝗲 𝗱𝗲𝗲𝗽𝗲𝗿 𝗶𝘀𝘀𝘂𝗲: India is building world-class airports and chasing global aviation ambitions, yet airline economics still sit at the mercy of fuel taxes, crude shocks, currency swings and geopolitics. A strong aviation market needs more than passenger demand — it needs a stable cost architecture underneath.

For investors and policymakers, the takeaway is simple: aviation isn't just planes in the sky. It's a live barometer of energy security, currency stress, consumer resilience and global supply-chain risk.

The current squeeze may ease if crude softens and West Asian airspace settles. But the lesson will stick around. India's next aviation growth cycle will need a more resilient fuel-pricing framework.

𝗦𝗺𝗮𝗹𝗹 𝗮𝗻𝗱 𝗺𝗶𝗱𝗰𝗮𝗽 𝘀𝘁𝗼𝗰𝗸𝘀 𝗼𝘂𝘁𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗲𝗱 𝗹𝗮𝗿𝗴𝗲-𝗰𝗮𝗽𝘀 𝗶𝗻 𝗔𝗽𝗿𝗶𝗹, largely as a recovery trade after the sharp correction earlier in the year.

Valuations had cooled, positioning was lighter, and domestic liquidity continued to support broader markets. Meanwhile, large-caps, especially those with higher global exposure, remained under pressure from FII selling and global uncertainty.

Over the next 3–6 months, the outlook for small and midcaps remains constructive, but not one-way. The easy rebound phase may be behind us, which means stock selection will matter much more from here.

Quality midcaps with strong cash flows, operating leverage, and reasonable valuations can continue to perform well. Smallcaps may stay volatile, but panic-led selling appears to have eased.

The key is to avoid chasing weaker names just because they have bounced. In this phase, quality and discipline matter more than momentum.

Disclaimer: This post is for informational purpose only and should not be considered as financial advice. Please consult a financial advisor before making any investment decision. Read Full disclaimer on the website.

INVASSET LLP
SEBI Registered Portfolio Manager
SEBI Registration No.: INP000006907

𝗔𝗿𝗲 𝗦𝗜𝗣 𝗶𝗻𝗳𝗹𝗼𝘄𝘀 𝗮𝘁 𝗿𝗶𝘀𝗸?

Not really — but the next phase may not be as smooth as the last one.

India’s SIP engine remains one of the strongest cushions for the market. In March 2026, monthly SIP contributions touched a record ₹32,087 crore, with nearly 9.72 crore contributing accounts. Even in a volatile month, investors continued allocating money systematically.

But the real story is more nuanced.

SIP AUM declined from ₹16.64 lakh crore in February to ₹15.11 lakh crore in March, largely due to market correction and mark-to-market losses. At the same time, the SIP stoppage ratio reportedly moved above 100%, meaning closures or matured SIPs were higher than new registrations during the month.

So the risk is not a collapse in SIP flows.

The risk is moderation.

If weak returns continue for several quarters, especially in small and midcap funds, some new investors may slow down, pause contributions, or reduce incremental commitments.

But structurally, the direction remains clear: Indian households are increasingly treating equities as a long-term savings vehicle, not just a trading opportunity.

The bigger message for markets is simple:
Domestic flows may fluctuate month to month, but they are now a serious structural force in Indian equities.

𝗜𝗻𝗱𝗶𝗮'𝘀 𝗜𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻 𝗟𝗼𝗼𝗸𝘀 𝗖𝗮𝗹𝗺. 𝗕𝘂𝘁 𝗜𝘀 𝗜𝘁 𝗥𝗲𝗮𝗹𝗹𝘆?
March CPI printed at 3.4% — well within RBI's 2–6% comfort band. On paper, everything looks fine.

But our fund manager sees a risk hiding in plain sight.

⚠️ The Upside Risk Nobody Is Talking About:

India imports over 85% of its crude oil requirement.

A sustained oil shock doesn't just hit your fuel bill. It ripples through:

→ Transport costs
→ Packaging & logistics
→ Food supply chains
→ Imported raw materials

That's not one price going up. That's the entire cost structure of the economy shifting.

What does this mean for interest rates?

RBI may not react immediately — but rate-cut expectations could get delayed or repriced entirely. And in a market that has already baked in multiple cuts, that's a meaningful risk for fixed income and equity valuations alike.

The lesson for investors:
Comfort on paper ≠ comfort in portfolios.

Inflation risk isn't always visible in today's number. It's hidden in the assumptions behind tomorrow's.

Are you accounting for oil-driven inflation risk in your asset allocation?

𝗠𝗮𝗿𝗸𝗲𝘁𝘀 𝗦𝗵𝗶𝗳𝘁: 𝗙𝗿𝗼𝗺 𝗣𝗮𝗻𝗶𝗰 𝘁𝗼 𝗦𝗲𝗹𝗲𝗰𝘁𝗶𝘃𝗲 𝗕𝘂𝘆𝗶𝗻𝗴

In Moneycontrol, Anirudh Garg, our Fund Manager at INVasset PMS, highlighted that while earnings commentary appears cautious, it does not signal structural weakness.

The market has transitioned from panic to selective opportunities, but key risks remain — including elevated crude prices, currency pressure, and persistent FPI outflows.

He also noted that while FY27 earnings recovery remains possible, the upgrade cycle has paused, making stock and sector selection more critical than ever.

📖 Read: https://www.moneycontrol.com/news/business/markets/daily-voice-management-commentary-signals-caution-not-weakness-fy27-earnings-recovery-still-possible-but-upgrade-cycle-paused-says-invasset-pms-anirudh-garg-13899261.html

Daily Voice: Management commentary signals caution, not weakness; FY27 earnings recovery still possible but upgrade cycle paused, says INVasset PMS' Anirudh Garg- Moneycontrol.com Nifty FY27 earnings growth expectations have moderated, with some estimates now closer to high single digits versus earlier double-digit optimism, said INVasset PMS' Anirudh Garg.

One of India’s strongest bull markets…
And most investors are ignoring it.

• Defence spending rising
• Order books full
• Geopolitics supporting demand

This isn’t cyclical anymore.

• Government push is structural
• Export opportunity opening up
• Multi-year growth visibility

But remember:
Ex*****on takes time.
Valuations already moving.

This isn’t a quick trade.
It’s a long-term theme.

Full breakdown:

India Defence Sector Outlook 2026 | Structural Growth Opportunity India’s defence sector is emerging as a strong structural growth story, driven by rising government spending, indigenisation policies, and increasing geopolitical tensions. With multi-year order visibility and export ambitions gaining traction, domestic defence companies are well-positioned for su...