India Stocks Outlook
Negative sentiment to stay; peace deal, oil in focus
This story was originally published at 16:52 IST on 8 June 2026
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By Arundathi A R
MUMBAI – Analysts expect the negative sentiment in the equity market to sustain for the short term as concerns around the war in West Asia are not seen easing any time soon. Crude oil prices will also be watched as the market's direction is largely dependent on it, analysts say. However, in the latest development, US President Donald Trump said Israel and Iran are looking at an immediate ceasefire. "The final peace negotiations are proceeding," Trump said in a post on Truth Social.
"So, it is mainly the Western Asian crisis which is driving down the market," Rupak De, senior technical analyst at LKP Securities, said. "Mainly, the rise in crude price triggered the Indian market," he said. Till the time the Nifty 50 index remains below 23,350, the sentiment is likely to remain negative, De said.
On Monday, the Nifty 50 settled 1% lower at 23123, down 243.70 points. The BSE Sensex also closed 1% lower at 73524.26, down 719.08 points. De expects the 50-stock index to face resistance at 23400 level and find support at 23000 level.
The foreign exchange swap facility announced by the Reserve Bank of India Friday is positive for the rupee and the debt market, but may not lead to sudden large inflows from foreign investors, market experts said in a discussion at ICICI Securities' investor conference in Mumbai.
"FX flow will come through FCNR (Foreign Currency Non-Resident) deposit and the inclusion of India into global bond index, but I am not positive on equity inflow till market correct in big way," the research head of a top broking firm said.
Foreign investors net sold shares worth INR 87.76 billion Friday, way higher than the INR 44.47 billion offloaded Thursday. Domestic investors continued supporting the equity market by net buying shares worth INR 91.34 billion. Foreign institutional investor flows rose nearly 59% in the last seven days.
Vinod Nair of Geojit Investments expects the Indian market to outperform its global peers in the coming days. "India may see relative outperformance if the global tech correction deepens, but elevated crude prices and rate uncertainties may cap the upside," he said in a note.
Elara Capital sees the sustenance of GDP growth moment um in 2026–27(Apr-Mar) challenging amid the ongoing West Asia war-led rise in energy prices and supply chain disruptions, the sub-normal monsoon, and El Nino. "We expect GDP growth to moderate to 6.6-6.7% in FY27E, broadly in line with the RBI's 6.6% projection, with risks tilted to the downside if geopolitical tensions prolong beyond Q1FY27 (Apr-Jun)," the brokerage said in its report.
Despite resilient domestic demand, the brokerage expects higher input costs, rising freight charges, and logistical disruptions to weigh on activity in the coming quarters. Elara sees the services sector to remain the key driver of India's growth, though momentum may moderate in FY27. "The escalation of the West Asia conflict, along with precautionary measures such as work-from-home advisories, restrictions on non-essential travel and higher fuel costs, may temporarily hit mobility-driven services such as tourism, hospitality and transportation, while also weighing on discretionary spending," said the brokerage.
Meanwhile, Emkay Globl Financial Services expects India's GDP growth at 6.3% in FY27, amid an average Brent crude oil forecast of $90 per barrel, potentially weaker monsoon amid El Nino, and an unfavorable base effect. "The West Asia crisis is likely to materially hurt manufacturing output in Q1 (Apr-Jun) due to higher input costs and lower energy availability," according to the brokerage. It sees private consumption being hit by retail fuel price hikes.
SBI Capital Markets also expects real GDP growth to moderate in FY27 due to significant global headwinds. "However, the deflator is likely to expand owing to rising inflation, which augurs well for nominal GDP expansion during the fiscal and will help the government meet some of the fiscal burden which may be needed to negotiate the tough year," SBICAPS said in its GDP update report.
According to rating agency Moody's Ratings, oil marketing companies in India, as well as IndiGo, lack adequate mitigation for dollar strength. However, it sees ample buffers for UltraTech and Bharti Airtel to combat dollar strength. Hindustan Petroleum Corp., Indian Oil Corp., and Bharat Petroleum Corp., according to the rating agency, are highly exposed to strong dollar-driven risks.
"This creates a double whammy during periods of elevated oil and gas prices and rupee depreciation, as higher procurement costs compress marketing margins and a weaker rupee raises the landed cost of every barrel," the rating agency said.
On Monday, the Indian rupee settled at 95.7075 a dollar on higher crude oil prices. " In the near term, spot USDINR is expected to consolidate within a range of 94.50 to 96.50," Dilip Parmar, senior research analyst at HDFC Securities, said in a note. End
US$1 = INR 95.7075
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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