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Informist, Tuesday, Sept. 29, 2026

--Nomura: Have slightly bearish outlook on GDP growth
--CONTEXT: Comments by Nomura Research official at press event
--Nomura: Vegetable prices picking up faster than in previous years
--Nomura: Rupee depreciation not a concern for FPIs as of now
--Nomura: RBI may do dollar/rupee sell/buy swaps to drain rupee liquidity

By Kabir Sharma

MUMBAI – Nomura has a slightly bearish outlook on India's economic growth, citing risks from deficient rainfall, higher food prices, potential fiscal slippage, and the possibility of companies passing on elevated input costs to consumers. Speaking at a press event, Aurodeep Nandi, India Economist, Nomura, said growth has remained resilient so far, but the firm's leading economic indicator has started to point lower. Deficient rainfall could weigh on agricultural output and rural consumption, while higher oil prices could create fiscal pressures. Higher input costs being passed on to consumers could also hurt consumption, the official said. 

Nomura also highlighted food inflation as the biggest current risk to the inflation outlook. Vegetable prices have been rising faster than in previous years, with the increase in September primarily led by onions. Cereals and sugar have also seen anomalous price increases, although sugar price momentum eased in September, the official said.

The brokerage expects inflation in India to rise from 4.8% in August to around 6.3% in the December quarter, before moderating. It sees FY27 inflation at 5.2%, slightly above the Reserve Bank of India's 5% projection. Nomura expects the RBI to raise the repo rate by 25 basis points in October and another 25 basis points in December, followed by a pause if inflation moderates as expected next year. The brokerage believes the rate-hike cycle is likely to be shallower than the 125-basis-point tightening currently priced by markets.

On the currency, Nomura said the rupee's depreciation is not a major concern for foreign portfolio investors at present, unlike at the start of the Iran war when accelerated portfolio outflows and concerns over the trade deficit accompanied a sharper fall in the rupee. The brokerage said currencies are currently not the primary factor influencing foreign investors. 

Nomura expects the RBI to use a combination of tools to absorb surplus rupee liquidity, including sell/buy foreign exchange swaps and greater forex intervention. The official also said a cash reserve ratio increase remains a possibility, while liquidity could be withdrawn as festive-season demand affects currency and money-market conditions. 

Nomura said the RBI should focus on its inflation-targeting mandate rather than using interest rates primarily to defend the rupee, noting that the central bank has other tools, including intervention, to manage currency pressures.  End

Edited by Himanshi Gupta

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