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Informist, Monday, May 11, 2026

 

By Arya S. Biju

 

MUMBAI – Benchmark equity indices are expected to remain under pressure in the coming session, with no major progress in US-Iran negotiations to end the conflict in West Asia in sight. With the US President Donald Trump rejecting Iran's latest proposal to end the war, the two sides stand locked in a standoff, with no clear path to reopen the Strait of Hormuz. Market participants will focus on the Consumer Price Index data, scheduled to be released Tuesday, for cues on how the impact of the West Asia war is panning out on the price front. 

 

The cautious mood deepened after Prime Minister Narendra Modi's appeal to the nation to curb consumption of petrol, diesel, gold, chemical fertilisers, and edible oil and to refrain from avoidable foreign travel as India finds itself in an increasingly tough spot amid the ongoing energy crises stemming from the war in West Asia. "It (PM's comment) indicates that the government expects the conflict to last longer than what most of the people think. And the government is preparing to be able to last a longer conflict," Himanshu Pravinchandra Pandya, a Securities and Exchange Board of India-registered investment advisor and founder of HP Private Wealth Advisory Services, said. 

 

Modi's comment has prompted investors to reassess the economic impact of higher crude prices, rupee depreciation against the dollar, and pressure on the current account deficit, Vinod Nair, head of research at Geojit Investments, said in a note. "At present, India's strong fiscal position and healthy forex reserves are helping the government to absorb the impact of elevated crude prices. However, prolonged geopolitical tensions could increase macroeconomic stress," he added. 

 

As a net energy importer, India is exposed to supply shocks due to war-led disruptions in West Asia, with higher energy prices posing risks to the current account deficit, inflation, and the rupee, Sok Yin Yong, fixed income analyst-Asia at Julius Baer, said in a note. Julius Baer expects India's gross domestic product growth to ease to 6% in 2026-27 (Apr-Mar), reflecting softer private consumption amid inflationary pressures, margin pressures in energy-intensive sectors, and delayed investments. This is sharply lower than the Reserve Bank of India's forecast of 6.9% GDP growth in FY27.

 

Moreover, foreign capital inflows to domestic equities remain constrained amid elevated oil prices, rising fiscal concerns, and expectations of a weaker rupee against the dollar. Further, rising 10-year government bond yields may complicate the government's record borrowing plan for FY27, the fixed income analyst said. Given this backdrop, Julius Baer has downgraded its rating on India from a 'buy' to 'hold/opportunistic'.

 

Apart from cost pressures from the war-led disruptions, analysts also flag the impact of a likely El Nio on the economy. "With the energy and El Nio shocks coinciding,... we expect headline inflation to average 5.6% in FY27," HSBC Global Investment Research said in a report Monday. This is up sharply from its earlier estimate of 4% at the beginning of 2026. Further, it sees India's GDP growth at 6% in FY27. Further, the brokerage expects the RBI to deliver two rate hikes over Oct-Mar, bringing the rate to 5.75%, compared to an earlier forecast of no change in rates. 

 

A further delay in resolving the US-Iran conflict would lead to a 5-10% correction in the Nifty 50 index, Pandya said. "And this (war-led disruptions and higher crude prices) will be impacting everywhere (sector) where hydrocarbon is an input, right from FMCG to fertilisers... all consumption items basically," Pandya added. He expects further significant earnings downgrades in the first two quarters of FY27 if the impasse in West Asia continues. On the other hand, he expects the index to bounce back to its all-time high by November if the conflict resolves quickly.   

 

Monday, the Nifty 50 index closed at 23815.85, down 360.30 points or 1.5%. Derivative analysts expect caution to remain till the Nifty 50 index stays below 24100 points. Tuesday, the index is seen finding support at 23800–23500 points and resistance at 24000-24200 points, according to technical analysts. 

 

Tuesday, investors will also watch out for the March quarter earnings of companies including Dr Reddy's Laboratories, Tata Power Co, Dixon Technologies India, Max Financial Services, and Torrent Power. Dr. Reddy's Laboratories is expected to report a 44% on-year decline in its consolidated net profit to INR 8.95 billion for the March quarter, as lower US sales amid rising competition in generic cancer drug Revlimid and price erosion are likely to weigh on earnings, analysts said. The company's top line for the quarter is seen falling 3% on year to INR 82.69 billion.  End

 

Edited by Saji George Titus

 

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