New Delhi, June 6 -- Rising geopolitical tensions and a potential supply shock stemming from the Iran crisis could increase the risk of stagflation in India, Nuvama Institutional Equities said in a GDP analysis report, even as the country's economy closed FY26 with stronger-than-expected growth.

The brokerage warned that FY27 could be more challenging despite healthy economic activity in the March quarter.

"FY27 is likely to be a challenging year, beginning with heightened geopolitical tensions that could keep input costs elevated and weigh on real income," the report said.

Highlighting the key risk to the economy, Nuvama said, "With the economy already in an inflationary phase, a prolonged supply shock - particularly alongside a weak ...