India Growth Softens H1 FY27, Rebounds H2: Nomura Forecast

Nomura predicts a slowdown in India's economic growth during the first half of FY27, primarily due to supply disruptions. However, they expect a rebound in the latter half of the year, forecasting a full-year growth of 6.8%. Strong demand and supportive policies are cited as positive factors, while the Iran conflict is a potential risk.

This forecast provides a nuanced outlook for the Indian economy, suggesting a period of near-term moderation before a recovery. For the stock market, this implies potential volatility in the first half of FY27 as investors digest the slowdown, followed by renewed optimism as growth picks up. The mention of the Iran conflict highlights geopolitical risks.

The near-term softening could lead to cautious sentiment across the broader market, potentially impacting cyclical sectors. However, the projected rebound in H2, supported by strong demand, could provide opportunities in consumption-driven and infrastructure-related sectors. The risk from the Iran conflict could impact oil-sensitive sectors and overall market stability.

Traders should monitor key economic indicators, especially those related to supply chains and inflation, in the coming quarters. Watch for any escalation in geopolitical tensions, particularly the Iran conflict, which could impact crude oil prices and India's import bill. Any policy responses to mitigate the slowdown will also be crucial.

• •India's economy set for slowdown in H1 FY27 due to supply disruptions.
• •Demand remains strong, recovery projected in H2.
• •Nomura forecasts full-year growth of 6.8%.
• •Supportive policies and easing trade tensions are positive factors.
• •Iran conflict poses a potential risk.