India’s financial markets are expected to sustain growth supported by domestic demand and services, despite external uncertainties like geopolitical tensions and rising energy prices, according to SEBI’s annual report for 2026-27.
India’s financial markets are likely to keep drawing support from strong domestic demand, government spending and a resilient services sector in 2026-27, even as global shocks threaten to unsettle sentiment, according to the Securities and Exchange Board of India’s annual report. The report said the economy had remained robust through 2025-26, with real GDP growth estimated at 7.7 percent, while the International Monetary Fund has projected growth of 6.5 percent for 2026-27, broadly in line with India’s continued outperformance versus the global economy.
The report’s optimism is tempered by a clear warning that geopolitics and energy prices could quickly change the outlook. SEBI said a prolonged conflict in the Middle East and crude prices above $100 a barrel would put pressure on India’s import bill, widen the current account deficit and add to inflation. It pointed to strategic petroleum reserves, supply diversification and targeted fiscal measures as key tools for preserving stability if oil markets turn more hostile.
Indian equities, meanwhile, had a difficult 2025-26. The Nifty 50 and broader benchmarks fell about 14 percent in dollar terms, weighed down by sustained foreign portfolio investor selling, a softer rupee, valuation concerns and slower earnings growth. SEBI said overseas investors pulled a record $19.7 billion from Indian equities during the year, even as domestic institutional investors, especially mutual funds, helped cushion the blow.
The backdrop is still not entirely negative. The IMF has recently revised India’s growth outlook several times, lifting its 2025-26 forecast to 7.3 percent in one update and later raising its 2026-27 estimate to 6.5 percent from 6.4 percent, citing stronger-than-expected performance and a somewhat more benign external environment. SEBI also said changes in global supply chains could create new opportunities for India, especially if energy markets normalise and tensions in the Middle East ease.
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