India’s Robust Economy to Bolster Markets Amidst Heightened Global Risks, Says Sebi
India’s financial markets are anticipated to maintain resilience through the 2026-27 fiscal period, bolstered by robust domestic economic fundamentals, as highlighted in the Securities and Exchange Board of India (SEBI) Annual Report for 2025-26. Despite persistent global challenges, including geopolitical uncertainties, elevated commodity prices, and volatile foreign capital inflows, the Indian economy demonstrated exceptional resilience. The estimated real GDP growth for 2025-26 stood at 7.7%, up from 7.1% the previous year, largely driven by strong private consumption and investment, which contributed 56.7% and 31.9% to nominal GDP, respectively. The International Monetary Fund (IMF) projects a 6.5% growth rate for India in 2026-27, significantly outpacing the anticipated global growth of 3.1%.
However, the report underscores that the global economic landscape will likely remain turbulent, particularly due to the ongoing Middle East conflict and potential spikes in crude oil prices, projected to exceed USD 100 per barrel. Such scenarios could exacerbate India’s current account deficit and heighten inflationary pressures. Despite these risks, improvements in fiscal discipline, inflation management, corporate balance sheets, and stable domestic institutional investments are poised to facilitate India’s relative outperformance in the face of global volatility.
Indian equities faced significant hurdles during 2025-26, with the Nifty 50 index and broader market indices slipping approximately 14% in US dollar terms, primarily due to persistent selling by foreign portfolio investors (FPIs), which amounted to a staggering USD 19.7 billion. The decline was further aggravated by currency depreciation, valuation concerns, and underwhelming earnings growth. Nevertheless, domestic institutional investment, particularly from mutual funds, has provided essential support during this downturn, creating a buffer against foreign outflows.
SEBI’s assessment suggests that while the domestic economic environment remains largely favorable, the performance of the market is inextricably linked to global geopolitical factors, energy pricing trends, and international capital movement. Restructuring of global supply chains may offer new investment opportunities for India, and a resolution to the geopolitical conflicts, coupled with stabilization of energy prices, will be critical for enhancing foreign capital flows and fostering a market recovery.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)