India’s macro outlook improves as oil prices ease: Report

New Delhi, July 6 (IANS) India’s macroeconomic and growth outlook has improved as lower oil prices, easing foreign portfolio investment (FPI) outflows and attractive valuations in rupee assets strengthened the country’s macro fundamentals, a report said.

“RBI is likely to remain growth supportive with liquidity support. Yields are likely to fall over time. With available excess capacity and a demand revival shaping up, it is possible that India’s growth outlook improves from here,” the report from DSP said.

The firm noted that improving growth, especially nominal growth, is likely to spur Corporate India’s sales growth.

The report said that FY27 balance of payments, once a market concern, is now likely to become a strength for the economy.

“With many rupee assets yielding better, rupee REER at an extreme, a wide segment of large-cap stocks at cheap levels and FPI debt inflows picking up, the India macro picture looks strong,” it added.

India’s REER fell below 88 in May 2026, a level usually seen only in major stress episodes, and the narrowing inflation gap with the United States weakens the long‑term case for faster rupee depreciation.

On equities, the firm recommended large‑cap stocks as the most attractive segment on valuation, arguing that if revenue growth recovers, these stocks have best odds of outperforming.

“Better growth is likely to percolate into stronger credit growth and improving demand. Construction activity is likely to result in a revival for the cement sector, which is staring at an improvement in operating performance,” it said.

On Nifty IT stocks, the firm said they are cheap on valuations but have concerns around growth.

“The emerging market rally is running on one leg—technology. South Korea and Taiwan have made the EM index highly concentrated by sector and stocks. India now appears to be a contrarian buy within the EM basket,” it added.

—IANS

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