Indian equity markets face a complex outlook for fiscal year 2027, with a potential earnings revival tempered by global uncertainty surrounding artificial intelligence, according to Manish Gunwani, CIO, Equity at Bandhan AMC. Speaking on Tuesday, February 24, 2026, Gunwani indicated that FY27 could see stronger corporate earnings driven by nominal GDP growth and a depreciating rupee.
Gunwani explained that nominal GDP is expected to rise from a recent bottom of 8-9% to 10-11%, which typically correlates positively with corporate earnings. He further highlighted the beneficial impact of rupee depreciation, particularly for sectors like pharmaceuticals, IT, refining, and oil and gas. “Rupee depreciation is solid for earnings,” Gunwani stated, noting that companies with significant dollar earnings will see increased profitability as they convert those earnings back into rupees at a more favorable exchange rate.
Though, Gunwani cautioned that current market performance is being more heavily influenced by anxieties surrounding the disruptive potential of AI than by underlying earnings data. “It’s not that earnings have been knocked off in the past two-three weeks, but the terminal value of a lot of businesses is under question,” he said. This concern is particularly acute within the IT services sector, which Gunwani identified as facing significant disruption in areas like BPO, application development, and infrastructure services.
Despite the AI-related headwinds, Gunwani expressed optimism regarding potential foreign investment flows into India. He noted that the rupee has experienced substantial depreciation in the last six months, making Indian assets more attractive to foreign investors. He as well pointed to the continued strength of India’s services sector, including global capability centers, as a positive indicator. Recent volatility in gold and silver prices, he added, could also contribute to stabilizing the capital account.
Gunwani anticipates broad-based benefits from the rupee’s depreciation, extending to both domestic and export-oriented sectors. He specifically cited banking, as well as companies involved in exporting, import substitution, and dollar-based pricing. The improved exchange rate effectively increases the value of dollar earnings for these businesses.
The Nifty 50 index fell nearly 1 percent on Tuesday, February 24, hitting an intraday low of 25,460, while the Sensex declined 1.6 percent to 82,410.99, reflecting the broader market sensitivity to global tech disruption, even as underlying earnings potential improves. The interplay between these factors presents a challenging landscape for investors, requiring a balance between short-term uncertainty and medium-term opportunities.