PL Wealth’s latest Market Outlook – August 2026 report finds that India’s domestic growth momentum remains resilient, supported by the return of foreign portfolio investors (FPIs) as net buyers, improving monsoon conditions and a broadly steady start to the Q1FY27 earnings season. However, elevated crude prices, persistent geopolitical risks and uncertainty around global interest rates are likely to keep markets selective in the near term, reinforcing the case for a staggered, quality-focused approach to equities.
Speaking on the findings, Inderbir Jolly, CEO, PL Wealth, said India enters the second half of the year with several encouraging signals — foreign investors have returned as buyers, the monsoon has recovered and the domestic growth and earnings backdrop remains resilient. At the same time, elevated crude prices, geopolitical developments and an uncertain global rate environment mean that markets are unlikely to move in a broad-based manner. We believe this is a phase for investors to remain selective, focus on quality and deploy capital in a staggered manner. Our long-term conviction in India remains intact, supported by domestic investment, financial deepening, demographics and the country’s structural growth opportunity.”
India’s provisional FY26 GDP growth stands at 7.7%, while the RBI projects FY27 growth at 6.7%. July manufacturing and services activity remained in expansion territory, with PMI readings of 53.9 and 53.1 respectively. Bank credit growth strengthened to 18.6% YoY, taking outstanding credit to ₹219.3 trillion as of June 2026, while capacity utilisation remained healthy at 75.2%, above its long-term average.
The report notes that inflation remains a key watch point. July CPI rose to 4.45%, above the RBI’s 4% target, driven primarily by higher food inflation, while the RBI has retained its FY27 CPI projection at 5.1%, with a potential Q3 peak of 5.9%. Brent crude rebounded sharply to around US$92 per barrel by End-July amid renewed tensions around the Strait of Hormuz. The rupee also remained structurally weak at around ₹95.4 to the US dollar, keeping inflation and external risks firmly in focus.
Foreign investor flows, however, provided a positive signal. After sustained equity outflows through the first half of the year, FPIs turned net buyers in July, recording equity inflows of around ₹20,200 crores — the first positive month since February. The report also highlights a strong recovery in monsoon conditions, with July rainfall around 1% above normal, narrowing the cumulative June-July deficit to approximately 13% below the long-period average. The IMD has forecast August rainfall at 97% of LPA.
Macro Environment
India’s macroeconomic backdrop remains relatively resilient despite external pressures. GST collections for June 2026 rose 15.4% YoY to ₹2.11 lakh crore, recording the fastest growth in 14 months, supported by strong domestic collections and imports. Cumulative GST collections for April-July FY27 stood at ₹8.43 lakh crore, up 10.1% YoY. India’s foreign exchange reserves remained comfortable at around US$667 billion, equivalent to approximately 10.5 months of import cover.
The monsoon has also emerged as a constructive development after a weak start to the season. June rainfall was around 40% below normal, but July rainfall recovered strongly to approximately 1% above normal. While the cumulative deficit remains around 13% below LPA, the improvement reduces some of the earlier concerns around food inflation and rural demand.
On the external front, trade developments remain an important medium-term support. The EU FTA has been concluded and is awaiting ratification, while the UK CETA and EFTA TEPA are effective. The New Zealand FTA has been signed, while the Oman CEPA awaits implementation. At the same time, negotiations on the India-US bilateral trade agreement remain ongoing, with a 10% Section 301 tariff currently in place.