New Delhi [India], December 30 : India is poised to witness a surge in Foreign Institutional Investor (FII) inflows in FY26, as corporate profit to GDP is projected to hit its peak in FY26-FY27, according to a report by Sharekhan, a financial services company.
The report highlights a remarkable increase in corporate profits over recent years, driven by favourable economic conditions.
It said "Corp. profit to GDP is likely to be at its best in FY26-FY27, which could be a big trigger for sharp FII flows into Indian equities"
The data highlighted that corporate profits, which stood at Rs 3.53 trillion in FY20, are expected to rise sharply to Rs 15.38 trillion by FY25 and further to Rs 20.84 trillion by FY27. This represents a Compound Annual Growth Rate (CAGR) of 29 per cent since FY20, marking a 5.9x growth over seven years.
By FY27, corporate profit to GDP is expected to climb to 5.3 per cent, a significant indicator of economic health. This growth, coupled with India's robust economic performance, is anticipated to attract strong FII inflows into Indian equities, boosting the stock market.
The report also noted that India's economy continues to outperform its global peers, including China, as reflected in the Emerging Market (EM) MSCI index. The report emphasized India's premium position due to its consistent and best-in-class growth rate globally.
It said "India is among the few economies that are set to get a higher growth rate over 2023-2028"
Looking ahead, the report remains optimistic about the next 3-5 years of economic expansion, driven by three key pillars: credit, capex, and consumption. The firm is particularly bullish on industrials, engineering, real estate, BFSI (banking, financial services, and insurance), and select consumer stocks.
However, the report noted that export-driven sectors like textiles, garments, IT, and pharmaceuticals are likely to outperform benchmark indices in 2025 due to tactical positioning and global market dynamics.
With corporate profitability at historic highs and the economy on a steady growth trajectory, as per report India is well-positioned to attract global investments, solidifying its status as a key player in the global economic landscape.
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