New Financial Year Begins on High Note; Markets Likely to Open Strong

Markets are expected to begin FY27 (2026-27) strongly, supported by global rallies and hopes of de-escalation in the US-Iran conflict. Investor caution remains as FIIs continue selling, offloading shares worth ₹11,163 crore for the 21st consecutive session. Markets were closed on Tuesday for the Mahavir Jayanti holiday.

Key Economic Indicators to Watch

Industrial Output Shows Steady Growth

• February 2026 IIP recorded 5.2% YoY growth, up slightly from January’s 5.1%.
• Indicates steady momentum in manufacturing and core industries.

GDP Growth Expected to Moderate

• ICRA projects FY27 GDP at 6.5%, down from 7.6% in FY26.
• Moderation due to elevated energy prices and potential disruptions from West Asia conflict.

Fiscal Deficit

• Centre’s fiscal deficit reached ₹12.52 lakh crore by February 2026 (80.4% of annual target).
• Slight improvement from last year (85.8%), signaling moderate fiscal discipline.

Industrial Credit Expands Rapidly

• RBI reports bank credit to industry up 13.5%, versus 7.5% last year.
• Strong lending support for businesses.

RBI Supports Exporters Amid West Asia Crisis

• Pre- and post-shipment finance extended up to 450 days for disbursals until June 30.
• Aims to mitigate logistical disruptions from geopolitical tensions.

Global Market Trends

• US markets closed positive, driven by hopes of reduced Middle East tensions.
• Asian markets opened higher, following Wall Street cues and easing inflation concerns.

Domestic Market Snapshot

• Despite global optimism, Sensex fell 1,635.67 points (2.22%) to 71,947.55.
• Nifty declined 488.20 points (2.14%) to 22,331.40.
• Factors: Rising crude prices, West Asia tensions, foreign fund outflows, and weak Asian trends.

Factors Shaping Market Outlook

Near-Term Outlook Remains Uncertain

• Finance Ministry cautions that growth is vulnerable to external shocks, especially West Asia crisis affecting input costs and supply chains.

Unemployment Slightly Declines

• Government surveys show unemployment down to 3.1% in 2025 from 3.2% in 2024.

Centre’s Borrowing Plans for FY27

• Plans to raise ₹8.2 lakh crore through dated securities in H1 FY27, including ₹15,000 crore via Sovereign Green Bonds.

Summary

• Positive global cues provide a strong start to FY27.
• Investor sentiment remains sensitive to geopolitical tensions and oil price volatility.
• Key indicators—industrial output, fiscal deficit, and credit growth—will guide market trajectory in the early days of FY27.