Inflation print for July came in line with market expectations. Imported inflation declined from 8.1% in June 2026 to 7.3% in
July 2026. Core CPI (ex food plus fuel) declined marginally by 5 bps to 3.85% in Jul’26 while Core CPI excluding gold stood at
3.44%. At the corporate level, aggregate EBITDA margins have declined from 16.8% in Q1 FY26 to 14.8% in Q1 FY27. The
decline in margins was particularly visible in cement, fertilizers, and mining & mineral products. Such decline possibly indi
cates that corporates are still holding off price adjustments even as input costs may have risen.
We expect August inflation print at 4.7%, with inflation possibly just breaching the 6% in October and November before
declining to ~5% in Q4 of FY27. Keeping with the historical trends, inflation for Q4 is likely to be lower than forecasts. We
expect repo rates to stay at 5.25% in FY27.
Meanwhile, with a muted US jobs data, and US inflation print for July at 3.4% somewhat losing steam, precious metals have
bounced back, betting on the Fed remaining non-committal to any rate hike and Central Bank buying of Gold pushing up the
prices, headed for a breakout perhaps though much will depend on Dollar index that is showing signs of nervousness. Sepa
rately, supply squeeze and lingering uncertainty, together with tariff conditionalities, conflict anchored disruptions and sus
tained demand from new age sectors have ensured base metals heading north despite a benign growth outlook globally,
more so in China. We don’t expect Fed to raise rates anytime soon.
We expect amount mobilized under FCNR (B) at around $45 billion as on 14 Aug’26 as against $36.7 bn mobilized till 31 July.
Overall total mobilized amount (including OFCBs + ECBs) is expected to be around the $50 –$52 billion mark.
The budgeted nominal GDP for FY27 is 10%. With real GDP most likely to cross the 7% threshold, we expect the nominal
GDP for FY27 to be at 13-13.5%. This will have cushioning impact of ~Rs 70000 crores on fiscal deficit in FY27.