PL Wealth’s latest Market Outlook – September 2026 report finds that India’s growth momentum remains resilient, supported by a strong Q1FY27 GDP print, returning foreign portfolio investor (FPI) flows, robust domestic liquidity and a healthy capital expenditure cycle. However, a persistent monsoon deficit, rising El Niño risks, elevated crude prices and the possibility of a 25–50 bps policy rate hike in H2FY27 could create near-term volatility, reinforcing the case for selective stock-picking and staggered deployment.
Speaking on the findings, Inderbir Jolly, CEO, PL Wealth, said: “India’s growth fundamentals remain encouraging, with a strong Q1FY27 GDP print, healthy credit growth, robust capital expenditure and returning foreign investor flows providing support to the economy and markets. At the same time, the monsoon deficit, rising El Niño risks, elevated crude prices and the possibility of a rate hike warrant a measured approach in the near term. We believe investors should focus on quality businesses, diversify across market capitalisations and deploy capital in a staggered manner rather than take broad-based market exposure. Over the medium to long term, India’s structural growth story remains intact, supported by demographics, financial deepening, domestic capex, defence indigenisation and the continued formalisation of the economy.”
India’s Q1FY27 GDP growth stood at 7.8%, driven by robust investment, with GFCF growing 11.9%, while industry, manufacturing and services expanded 8.6%, 9.2% and 10.0% respectively. Non-food bank credit growth accelerated to 19.1% YoY as of July 2026, while capacity utilisation remained healthy at 75.2%, above its long-term average. GST collections also remained strong, with August gross collections rising 14.8% YoY to ₹1.99 lakh crore.
Inflation, however, remains a key watch point. July CPI stood at 4.45%, with food inflation at 5.52%, while core inflation remained at 3.9%. The RBI has revised its FY27 CPI projection to 5.0%, with Q3 inflation expected to peak at 5.9%. PL Research believes this estimate could be at risk of being breached given the evolving El Niño dynamics. Brent crude averaged around US$90–93 per barrel during August and closed at approximately US$93 per barrel at month-end, adding further pressure to inflation and margins.
Foreign investor flows have provided a positive signal, with FPIs turning net buyers for the second consecutive month and purchasing around US$3 billion of Indian equities in August. DIIs also continued to provide strong liquidity support, with purchases of approximately US$6 billion during the month. The report notes that the combination of sustained domestic buying and returning FPI confidence provides a meaningful cushion to the market.
The monsoon remains an important risk factor. The cumulative monsoon deficit stood at 13% as of August 26, with 16–17 meteorological subdivisions in deficient territory, while Kharif sowing remained 2% below normal. The report highlights that a strengthening El Niño could result in a global agricultural commodity spike across sugar, palm oil, coffee, cocoa and soybean, potentially putting further pressure on food inflation and rural demand.