India’s macro outlook may remain under pressure in the near-term as risks linked to West Asia tension, elevated crude oil prices and weaker monsoon expectations weigh on growth and inflation, according to Antique Stock Broking. They also do not expect any sharp spike in fuel prices anytime soon.
In its latest India strategy note titled Delhi Diaries #1, Antique Stock Broking said discussions with senior government officials and former policymakers pointed to a difficult macro environment over the next few months, with inflation risks staying elevated and private investment activity likely to remain cautious.
Crude price continues to be a key factor
The brokerage firm said officials indicated that energy availability is not a concern for India at this stage, but prices may remain elevated at least till September 2026 because production disruptions and infrastructure damage in key oil-producing regions could take time to normalise.
Antique Stock Broking also said officials refrained from giving any indication on fuel price hikes, though the brokerage firm believes the government may absorb a significant part of the pressure instead of passing on the entire burden to consumers.
The report further noted that uncertainty around global conditions may delay the long-awaited revival in private sector capital expenditure.
Crude oil prices may stay elevated till September
Antique Stock Broking said government officials do not see any immediate risk to energy supply availability, though prices are expected to remain elevated over the near term.
“Availability of energy supplies is not a constraint; however, prices may remain elevated at least till September,” the brokerage firm said.
The report cited estimates from the US Energy Information Administration, which expects Brent crude oil prices to rise to $96 per barrel in 2026 before moderating to $76 per barrel in 2027.
Antique Stock Broking said production disruptions across key energy-producing regions remain a major concern.
The brokerage firm cited estimates showing production disruption expectations at 7.5 million barrels per day in March 2026, 9.1 million barrels per day in April 2026 and 6.7 million barrels per day in May 2026 if the conflict does not persist beyond April.
The report said damages to infrastructure and production curtailments may continue to affect pricing trends for several months.
Fuel price hikes remain uncertain, says brokerage firm
Antique Stock Broking said officials avoided giving any direct indication on whether petroleum prices may rise for consumers.
Still, the brokerage firm believes the government may opt for only moderate increases in fuel prices even if crude oil prices remain elevated.
“Officials refrained from providing any indication. However, we believe that government may only take a moderate price hike in petroleum products,” Antique Stock Broking said.
The brokerage firm said the fiscal implications of reducing fuel taxes remain significant.
According to Antique Stock Broking estimates, a Rs 10 per litre excise duty cut on petrol and diesel could cost the government around Rs 1 lakh crore annually, equivalent to nearly 0.26% of gross domestic product.
The report also noted that the government has already created a Rs 1 lakh crore Economic Stabilization Fund for FY26 through supplementary grants and internal funding adjustments.
Antique Stock Broking further cited Reserve Bank of India estimates showing that every 10% increase in crude oil prices, if passed on to consumers, could lead to 50 basis points higher inflation and 15 basis points lower economic growth.
The brokerage firm said this balancing act may keep policymakers cautious on any large fuel price revisions.
Antique Stock Broking sees inflation and growth risks rising together
Antique Stock Broking said senior officials acknowledged that macro risks remain tilted toward higher inflation and slower economic growth if geopolitical disruptions persist.
“Macro risks remain tilted toward higher inflation and lower growth, particularly if energy disruptions in West Asia persist and monsoon turn out to be below normal,” Antique Stock Broking said in the report.
The brokerage firm said officials pointed to signs of moderation across several economic indicators, including manufacturing activity, services activity, industrial production and business confidence.
According to Antique Stock Broking, concerns over a below-normal monsoon linked to possible El-Nino conditions could add further pressure on inflation and consumption trends in the coming months.
The report said policymakers remain watchful of both domestic and global risks as India enters a period of elevated uncertainty.
Private capex revival may take longer
Antique Stock Broking said uncertainty around growth and global conditions may delay the revival in private capital expenditure.
“Private capex revival may get delayed given heightened uncertainty,” the brokerage firm said.
The report said officials believe private investment cycles historically improve only when overall capacity utilisation crosses 80% for two consecutive quarters.
The brokerage firm said companies may continue adopting a cautious stance toward fresh investment plans until visibility on demand and global conditions improves.
The report also suggested that policymakers are not immediately worried about loan growth remaining ahead of deposit growth, though it may put pressure on banking sector margins.
“Officials are not concerned about sustained loan growth exceeding deposit growth, but may result in lower margins,” Antique Stock Broking said.
India-US trade deal may take more time
Antique Stock Broking said officials hinted that negotiations around the India-US trade deal remain fluid and implementation timelines could stretch further.
“Officials hinted that the India-US relationship is still fluid, one can expect some delays in final implementation of India-US trade deal,” the brokerage firm said.
At the same time, the report said India may continue receiving stronger foreign direct investment inflows because of recent trade agreements with developed economies.
Antique Stock Broking cited trade arrangements involving the European Union, United Kingdom, Australia, European Free Trade Association and New Zealand as supportive factors for future foreign investment inflows into India.
The brokerage firm also said there is currently no active discussion around changing long-term capital gains tax rules for equities.
Government likely to cushion part of the macro shock
Antique Stock Broking said the broader message from discussions with policymakers suggests the government may attempt to cushion part of the pressure arising from elevated energy prices and slowing growth conditions.
At the same time, the brokerage firm said policymakers remain conscious of inflation risks and the possible impact of geopolitical disruptions on India’s economic momentum over the next few quarters.
Conclusion
The report suggested that while India’s economy remains stable, policymakers and businesses may continue operating cautiously until there is better visibility on crude oil prices, monsoon trends and global geopolitical conditions.
Disclaimer:
The following report contains market analysis and macroeconomic projections based on third-party brokerage insights. These views are intended for informational purposes only and do not constitute a specific offer, solicitation, or recommendation to buy, sell, or hold any securities or investment products. Readers are advised to consult with a SEBI-registered investment advisor or a qualified financial professional before making any decisions based on these projections, as market conditions and geopolitical factors are subject to rapid change.
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