Nomura sees weak non-farm econ growth H2 as cos face margin pressure, El Nino
This story was originally published at 14:04 IST on 28 August 2026
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MUMBAI – Nomura India Composite Leading Index, an indicator of India's non-agricultural economy, is signalling a weaker growth in the second half of 2026-27 (Apr-Mar). The expected growth acceleration for the June quarter may not sustain in the second half, Nomura said in a report. The brokerage highlighted some key reasons for this forecast--companies' profit margins are under pressure, the impact of El Nino, and unfavourable base effects.
India's corporate sector has only partially passed on the higher input costs to consumers. This, coupled with the impact of deficient rains and lagging kharif sowing are seen hurting economic growth in Oct-Mar. "Not only does this increase the probability of lower agricultural GVA (gross value added) growth, but also a moderation in growth of consumption/services, if rural demand and sentiment are impacted," it said.
Nomura said while fiscal risks have de-escalated since the outbreak of the US-Iran war, they are still considering a 0.2 percentage point slip to the FY27 fiscal deficit target of 4.3% of GDP, mainly reflecting higher subsidy burdens this year. "Any expenditure consolidation by the government, particularly on capex, could weigh on growth," it added. "Finally, unfavourable base effects will be at play from Q2 FY27 (July-September) onwards, with GDP growth last year trending at ~8% levels for the next three quarters (reflecting the GST boost)."
Nomura India Composite Leading Index has fallen to 99.9 in the September quarter from 100.5 in the last two quarters, it said, adding that a sub-100 level shows the possibility of "below-trend" growth. A fall in returns on equity, and lower real credit and real money supply growth have been contributing to the weaker signal. End
Reported by Ashutosh Pati
Edited by Akul Nishant Akhoury
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