Worst of rupee depreciation may be over, says HDFC Securities; lauds RBI's balanced approach

Mumbai (Maharashtra) [India], April 8 : HDFC Securities on Wednesday released its 'The Big Review' report, stating that India's real GDP growth is expected to remain at 6-7 per cent, while nominal growth is expected to improve soon.

Speaking at the event in Mumbai's St. Regis, Varun Lohchab, Chief Research Officer-Equities at HDFC Securities, said, "While the real GDP growth is expected to remain at 6-7 per cent, nominal growth will be better due to inflation improvements."

He added that despite Foreign Institutional Investor (FII) flows currently being negative, they are expected to improve in FY27 compared to the previous two years.

Lohchab also highlighted the currency situation, suggesting that the worst of the rupee depreciation may be over.

Regarding Foreign Direct Investments (FDIs), he noted that huge outflows are unlikely in the coming months and that triggers for a reversal are awaited. He stated that absolute and relative earnings growth in FY27 is not strong and that valuation premiums have now become long-term premiums.

Dhiraj Relli, Managing Director and CEO of HDFC Securities, believes domestic investment flows into India are expected to remain strong, driven by direct investment opportunities and a decrease in FII selling pressure.

He said, "The ongoing war situation is identified as a key variable that could introduce volatility, but a resolution is expected to lead to a significant upside for the Indian markets in the future."

He expressed optimism for FY27, anticipating a positive performance for the Indian market.

Answering a question fromregarding the RBI MPC minutes, Relli said, "The RBI's monetary policy announcements, which predict 6.9% GDP growth for FY27, are seen as reasonable and constructive, with no immediate interest rate hikes anticipated."

Speaking along similar lines, Unmesh Sharma, Head of Institutional Equities at HDFC Securities, said, "The RBI's decision to maintain the status quo on repo rates is seen as a prudent 'wait and watch' approach, given the geopolitical instability and uncertainty surrounding the conflict."

He added that HDFC Securities estimates GDP growth could be slightly lower than the RBI's projection, by approximately 10-20 basis points. He advised investors to buy stocks slowly, continue monitoring daily data, and opt for a long-term investment approach.

Earlier in the day, the RBI maintained the 'status quo' on the repo rate at 5.25% in its first Monetary Policy Committee meeting for FY26-27.

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