ANZ Turns Bullish on India, Raises FY27 Growth Forecast and Sees August Rate Hike

The Quick Take

• ANZ raised India's FY27 growth forecast, citing the country's strong GDP expansion momentum
• India's economy grew 7.8% in March quarter and 7.7% in FY26, among the fastest major economies
• ANZ forecasts 6.9% growth for FY28 and anticipates RBI rate hikes beginning in August

ANZ's bullish turn on India follows confirmation that the economy expanded 7.8% in the March quarter, with full-year FY26 growth at 7.7% — figures that place India firmly as the world's fastest-growing major economy. The raised FY27 forecast reflects confidence that domestic consumption, infrastructure investment, and service exports can sustain elevated growth rates even as global demand moderates. ANZ's endorsement adds to a chorus of international banks revising India's growth trajectory upward following a run of stronger-than-expected quarterly prints.

The forecast of August rate hikes signals ANZ's view that India's growth momentum is strong enough to prompt the RBI to normalize monetary policy. A rate hike cycle would be significant for Indian equities — particularly rate-sensitive sectors like real estate, auto financing, and NBFCs — while benefiting the banking sector through improved net interest margins. Foreign institutional investors, who have been net buyers of Indian equities in 2026, will watch the RBI's August meeting closely as a potential inflection point for sector rotation within the Indian market.

The macro variable that determines whether this thesis holds is India's monsoon outcome — a deficient monsoon would suppress rural consumption and agricultural output, potentially dragging Q2 FY27 GDP below consensus. Additionally, watch global commodity prices: India is a major oil importer, and a spike in crude would widen the current account deficit and pressure the rupee, complicating the RBI's rate-hike calculus. Quarterly GDP releases and inflation data over the next two quarters will either validate or test ANZ's upgraded trajectory.

Synthesized from 1 source.