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India Inc Navigates AI, Geopolitics: Sector Outlook 2026-27
2 Apr
Summary
- Banks expect NIM recovery amid slowing deposit growth and rising fund costs.
- FMCG earnings visibility to improve with stabilising costs and better summer demand.
- IT sector faces AI disruption and global uncertainty, leading to target price cuts.
Corporate India faces significant uncertainty entering fiscal year 2026-27, challenged by geopolitical tensions and the disruptive impact of AI. The banking sector anticipates a gradual recovery in net interest margins, supported by steady loan growth. However, lagging deposit growth may increase short-term funding costs for banks.
The FMCG sector is poised for better earnings visibility through FY27. Stabilizing raw material costs and the prospect of a stronger summer season are expected to drive performance, with selective price increases anticipated in packaged foods and personal care.
The IT sector is experiencing a downturn, with indices down significantly due to concerns over AI's impact and global economic instability. Analysts have reduced target prices, but companies focused on AI capabilities and steady deal wins may be better positioned.
Oil and gas upstream companies may see boosted earnings from rising crude prices, while oil marketing companies face margin compression. The pharma sector is bracing for cost pressures from disrupted shipping routes and raw material supply issues, alongside a low-margin, high-volume market for semaglutide generics.
