Indian Rupee: GDP Data to Show Resilience – DBS

DBS Group strategists Taimur Baig and Nathan Chow expect upcoming 1QFY27 GDP data to confirm that the Indian economy is more resilient to geopolitical shocks than initially feared, providing an optimistic tone to recent discussions on India's growth outlook.

**Growth momentum slows, but resilience remains**

The Indian economy has shown some resilience recently. Data indicate that real GDP grew 7.8% year-on-year in 1Q26 (4QFY26), moderating from the revised 8.0% growth in the previous quarter. DBS's nowcast framework, built on published economic data, also points to a cooling trend. Nevertheless, strategists believe the upcoming data will prove the economy's ability to withstand pressure is better than expected.

**Structural strengths offset external uncertainties**

Despite external headwinds, India retains several structural advantages. Government investment in infrastructure, manufacturing incentives, and digitalization continues to support domestic demand. Sectors such as financials, industrials, utilities, and renewable energy are expected to benefit from sustained capital expenditure and the energy transition. Meanwhile, the application of artificial intelligence is expected to boost productivity over time in banking, healthcare, and telecommunications, adding to long-term growth momentum.

**Market performance may widen sector divergence**

For investors, Indian equities may see greater divergence across sectors. Traditional IT outsourcing models face disruption, while beneficiaries tied to AI infrastructure, domestic capital expenditure, the energy transition, and productivity gains are likely to attract more capital. This structural shift implies that a blanket bet on India is no longer sufficient; instead, more precise identification of opportunities driven by policy and technological innovation will be key.