Mayur Patel of 360 ONE Asset expects Indian corporate earnings to see meaningful upgrades in the second half of FY27, driven by lower crude prices and increased consumer spending. Foreign institutional inflows are also projected to improve significantly over the next six months as economic conditions stabilize.
What Happened
Mayur Patel, President and Fund Manager at 360 ONE Asset, has shared a positive outlook for Indian corporate earnings in the latter half of the 2027 fiscal year. Based on his assessment, current market estimates for the Nifty 500 index—which sit around 12% to 13%—may be conservative. He believes that favorable macroeconomic shifts could push growth above 15% in the second half of the year. This outlook is primarily supported by declining crude oil prices, which help reduce costs for Indian companies, alongside a recovery in discretionary consumer spending and steady private capital investment.
The Outlook For Foreign Investment
Foreign institutional investors have been net sellers in the Indian market for the past three years. Patel attributes this to multiple factors, including the relative valuation appeal of Chinese equities and the perception that India lacks a direct 'AI play.' However, he expects a material change in these flows over the next three to six months. Factors such as improved access to Indian government bonds and the Reserve Bank of India’s focus on liquidity and growth are expected to attract inflows ranging from $60 billion to $80 billion, potentially supporting market stability.
RBI Policy and Economic Growth
While there is ongoing discussion regarding inflation potentially exceeding 5%, Patel suggests that the Reserve Bank of India (RBI) is likely to prioritize economic growth over immediate interest rate hikes. In his view, the central bank treats current inflationary pressures as temporary. The focus on maintaining liquidity is seen as a supportive measure for corporate expansion and credit growth, which typically benefits sectors dependent on domestic demand.
Sectoral Preferences and Risks
Patel remains cautious regarding the Indian IT services sector. Despite low valuations in some large-cap names, he highlights the risk of revenue deflation caused by the adoption of Generative AI. He believes IT firms need to show more tangible progress in their AI-led transformations before the sector becomes attractive.
Conversely, he identifies banking, Non-Banking Financial Companies (NBFCs), consumer technology, and telecom as high-potential areas. His optimism for banks and NBFCs is backed by consistent system credit growth and the RBI's recent stress tests, which showed strong asset quality. Additionally, he points to the rising average revenue per user (ARPU) in the telecom sector and a shift toward better profitability in the quick commerce space as positive indicators for domestic services.
What Investors Should Track
Investors may monitor the actual quarterly earnings reports over the coming months to see if the projected 15% growth materializes. Additionally, tracking the net inflow/outflow data for foreign institutional investors will be important to see if the expected $60-80 billion inflow begins to reflect in market liquidity. Finally, management commentary from major IT firms regarding the impact of AI on their revenue models will remain a key monitorable for those with exposure to the technology sector.