• Crude and currency: Crude oil is expected to average below $85 per barrel for the fiscal year, limiting any material impact on the import bill. Additionally, the leveraged FCNR deposit scheme is projected to attract $50–60 billion in inflows, helping offset rupee pressures.
• FII flows outlook: Foreign institutional investors hold a 91% short position on index futures supported by positive roll yields, but the upcoming August and November MSCI reviews could redirect foreign capital into India from markets like Korea and Taiwan.
• Nifty earnings trajectory: Nifty earnings are estimated to grow by 12.5% from 1,086 rupees to 1,220 rupees this fiscal year. Over the last decade, corporate earnings grew at 12.9% while the Nifty price index grew 9.3%, leaving room for market prices to catch up.
• Key sectoral bets: Financial services remains a top pick to lead large-cap outperformance due to its roughly 37% Nifty weighting, while defense is positioned for sustained growth on multi-year order books, rising government expenditure, and expanding export opportunities.