A report by Nuvama Institutional Equities highlights the risk of stagflation in India due to geopolitical tensions arising from the Iran crisis. Although India's economy showed strong performance in FY26, with a real GDP growth of 7.8% in the fourth quarter and an annual growth of 7.7%, the outlook for FY27 is less optimistic. Nuvama has revised its growth forecast down to 6-6.5% for FY27, attributing this adjustment to potential supply shocks and rising oil prices linked to the Iran situation. The brokerage noted that while inflationary pressures could persist, domestic factors such as effective liquidity management by the Reserve Bank of India (RBI) and healthy credit growth could mitigate some negative impacts. Despite the challenges, investment activity remained robust, with a significant increase in gross fixed capital formation during the last quarter of FY26. The trajectory of oil prices, geopolitical developments, and monsoon conditions will be crucial in determining India's economic performance in the coming year.