The fund management firm expects nominal GDP growth to accelerate to above 12 per cent in the coming quarters, even as sticky inflation and elevated global commodity prices could keep interest rates higher for longer.
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“In the absence of a fresh global shock, FY27 growth estimates will likely need to move above 7 per cent,” SBIFM Research said, adding that a stronger growth trajectory could provide room for real rates in India to adjust higher if inflation remains sticky. The optimism follows real GDP growth of 7.8 per cent year-on-year in Q1 FY27, with investment and exports emerging as the principal drivers rather than consumption.
The report said the composition of growth is particularly encouraging, with real gross fixed capital formation and exports growing around 12 per cent each, compared with 7.1 per cent growth in consumption. Corporate capital expenditure is also expected to strengthen, with capex by BSE 500 companies projected to rise 11 per cent in FY27, following ₹10.4 trillion of capex in FY26. Power is expected to account for around 55 per cent of incremental corporate capex, followed by iron and steel and capital goods.
“As the domestic policy impulse fades and consumption becomes less broad-based, the investment cycle and global trade cycle will have to carry a greater share of the growth burden,” the report said. It therefore sees exports, manufacturing, capital goods and other business-oriented segments as relatively more attractive, while recommending greater selectivity in consumption-oriented sectors.
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For India, SBIFM expects the Reserve Bank of India could eventually shift from its current neutral stance towards tightening, with around 50 basis points of cumulative rate hikes in FY27 being plausible, although the timing and magnitude would remain data-dependent.