According to reports from Business Standard, PhillipCapital has trimmed its India Gross Value Added (GVA) growth estimate for FY27 to 6.6-7.1 per cent from its earlier projection of 7.0-7.5 per cent, citing the prolonged West Asia conflict as a key drag on the economy. The brokerage firm retained its FY28 GVA estimate at 7.6 per cent, expressing cautious optimism that a resolution of the US-Iran conflict could gradually restore macroeconomic normalcy. As per the latest India Strategy report, the war extended a little longer than anticipated, largely denting Q1FY27 and FY27 growth momentum. PhillipCapital cautions that if the West-Asia war prolongs further and commodity prices remain elevated, Indian earnings and macros would be adversely impacted.
As reported by Business Standard, PhillipCapital retained its stance of moderate equity returns from the Indian stock market in FY27 and advises investors to keep churning, adopt a buy-on-dips strategy for generating alpha. The brokerage firm prefers large-mid cap stocks as a thematic investment. According to the report, PhillipCapital slashed weights in IT (structural) followed by the highest reduction in capital goods (expensive), with marginal cuts in banks, automobiles, defence, chemicals, pharma, EMS, logistics, gold & silver. On the other hand, it increased holdings in retail, power, NBFCs, insurance, oil & gas, aviation, and real estate. In its latest India Strategy thematic report, the brokerage states that even as India's long-term growth story remains intact, but is largely known and factored in.
According to Business Standard, the West Asia conflict caused significant disruptions to oil supply through the Strait of Hormuz, with Brent crude surging to $118 per barrel on March 31, 2026, before easing to around $80 per barrel in recent days. The Bloomberg Commodity Index rose about 6 per cent from pre-conflict levels and 25 per cent year-on-year. The spike in energy prices fed sharply into domestic wholesale price inflation, with WPI fuel inflation surging to 30.33 per cent year-on-year in May 2026, pushing overall WPI inflation to 9.68 per cent from 8.26 per cent in the previous month. Consumer price inflation (CPI) remained relatively contained at 3.9 per cent in May 2026, marginally below the Reserve Bank of India's (RBI) 4 per cent target.
As reported by Business Standard, the Indian rupee depreciated to a historic low of 96.8 per/$ in mid-May 2026, driven by foreign portfolio investor (FPI) outflows of nearly $23 billion during the March-May 2026 period. Among emerging-market peers, the Indian rupee depreciated 5 per cent since the start of the conflict. In comparison, Malaysia (4 per cent), Thailand (5 per cent) and Turkey (5 per cent), but less severe than Sri Lanka (8 per cent), Indonesia (7 per cent) and the Philippines (6 per cent). The report highlighted a sharp divergence between foreign and domestic flows, with Indian equities recording ₹4.9 trillion in FPI outflows since September 2024, while domestic institutional investors invested ₹13.6 trillion in the same period. Outstanding FPI investment in India is down by $32 billion from its FY25 peak.
According to Business Standard, the RBI, in its recent monetary policy review, raised its FY27 inflation forecast by 50 basis points to 5.1 per cent and trimmed its GDP growth estimate by 30 basis points to 6.6 per cent. PhillipCapital expects the central bank to raise rates by 0-50 basis points during FY27, although a status quo outcome remains possible if commodity prices reverse. The brokerage believes that the worst of the move in the Indian currency seems to be behind us, taking cues from the recent RBI measures to attract foreign flows. Any slowdown in domestic equity inflows could pose a significant risk to Indian equities in the absence of returning global flows.
