Rewind FY26: Home bulls are just waiting for the bullets to stop flying

Mumbai: India's equity indices ended FY26 with losses, their worst fiscal performance since the pandemic-hit FY20. The outlook for the FY27 hinges on the ebbing of the West Asia conflict, particularly through its impact on crude oil prices and the rupee, according to analysts.

"A ceasefire in the near term could trigger a recovery, with Indian equities potentially revisiting previous highs," said Amit Khurana, head of institutional equities at Dolat Capital Market. "However, if the situation persists for another month or longer, we could see a round of downgrades to Nifty earnings estimates."

In the financial year ended March 31, the Nifty fell 5%, and the Sensex declined 7% from the same period a year ago. The Nifty Small Cap 250 and Nifty Micro Cap 250 also fell 5.4% and 8.7%, respectively, while the Nifty Mid Cap 150 gained 1.6%, bucking the weak trend. Foreign institutional investors (FIIs) sold shares worth ₹1.6 lakh crore during the year, the highest annual outflow on record. Domestic institutions pumped ₹8.49 lakh crore into stocks-their largest investment ever.

The outlook has weakened since early 2026 and is now closely tied to oil price movements, said Vikas Gupta, CEO at OmniScience Capital.

"Any supply disruption will weigh on industries, GDP and markets," he said. "However, a quicker resolution could trigger a sharp global relief rally, especially in India, given the severe correction."

Brent crude prices have surged from $72.5 per barrel a month ago to about $107.3, heightening concerns over the impact of higher oil prices on inflation and interest rates.

Khurana said companies could remain under pressure in the first two quarters of the new financial year as higher input costs could weigh down earnings.

At current levels, however, valuations are turning more reasonable, and investors with a three- to five-year horizon may consider deploying capital, Gupta said.