Market Brief: India FY27 Earnings Outlook Corporate earnings in India are projected to experience a significant revival in **FY27**, moving past the modest growth seen in recent quarters. Market analysts expect a transition from "strong macros but weak micros" to a more synchronized growth phase. Economic Drivers Nominal GDP growth is a primary catalyst for this shift. After bottoming out in the **8% to 9%** range during FY26, nominal GDP is forecast to climb to **10.5%** in FY27. This acceleration is expected to be fueled by a recovery in the GDP deflator and an inflation rate stabilizing around **4%**. Historically, corporate revenue and profit growth show a high correlation with nominal GDP. Consequently, earnings for the Nifty 50 are projected to accelerate from a sluggish **5% to 6%** in FY26 to a robust **15% to 18%** in FY27. Currency and Sectoral Impact The Indian Rupee has recently faced pressure, trading near the **91.10** mark against the US Dollar. While this depreciation reflects global capital account stress, it serves as a tailwind for export-heavy and dollar-earning sectors. Key beneficiaries of a weaker rupee and improved pricing power include: * **Information Technology & Pharma:** Enhanced margins on dollar-denominated contracts. * **Refining & Metals:** Benefiting from dollar-linked pricing and import substitution. * **Banking:** Supported by healthy credit growth and stable asset quality. AI and Market Sentiment While the earnings outlook is improving, market sentiment remains heavily influenced by global uncertainty surrounding Artificial Intelligence. The terminal value of traditional business models, particularly in IT services, is currently under scrutiny. AI disruption is currently weighing on valuations more than immediate earnings. Investors are grappling with shifts in the IT sector toward outcome-based pricing, though long-term adoption may eventually act as a productivity enabler rather than a pure disruptor. Capital Flows and Manufacturing Foreign Institutional Investors (FIIs) have shown signs of returning, with recent single-day purchases exceeding **₹3,480 crore**. This optimism is supported by resilient private sector activity, with Manufacturing PMI readings remaining positive. The domestic manufacturing cycle is further bolstered by record capital outlay. The defense budget for **FY26-27** has seen a **15%** year-on-year increase, with a capital outlay of **₹2.19 lakh crore** aimed at accelerating domestic production.