SEBI reports Indian market resilience amid geopolitical and FPI risks

The Securities and Exchange Board of India (SEBI) projected resilient market conditions for 2026-27, supported by an estimated 7.7% GDP growth in 2025-26. Despite this domestic strength, the regulator cautioned that geopolitical tensions, particularly in the Middle East, and crude oil prices exceeding $100 per barrel pose significant risks to inflation and the current account deficit.

Indian equities faced challenges during the 2025-26 period, with the Nifty 50 and broader indices declining approximately 14% in US dollar terms. This decline was driven by record foreign portfolio investor (FPI) outflows totaling $19.7 billion, rupee depreciation, and slower earnings growth. However, robust investment flows from domestic institutional investors and mutual funds provided a critical cushion against these foreign outflows.

Looking ahead, the IMF projects India's growth at 6.5% for 2026-27, significantly outpacing the expected global growth rate of 3.1%. SEBI noted that fiscal consolidation, improving inflation dynamics, and strong corporate balance sheets are expected to support India's relative economic outperformance.