Indian equity markets are anticipated to show more stability in 2026, supported by factors like lower inflation, post-monsoon harvests, and the impact of gold, as per a report from Bajaj Finserv Asset Management Limited. The report suggests that corporate earnings could see an improvement due to government tax measures and monetary easing by the RBI, indicating a broad-based cyclical recovery. It is projected that domestic cyclicals and consumption will lead the sectoral growth, while exports may pick up pace with reduced tariff uncertainties and a stable rupee.
CY25 witnessed significant market fluctuations due to trade tariffs, geopolitical tensions, and foreign institutional investor outflows. However, the markets remained resilient, backed by strong domestic fundamentals and changing investor sentiments. Large-cap stocks offered stability, mid-caps saw a modest return of around 5%, while small-caps experienced an 8% decline, reflecting investor preference for strong balance sheets and visible earnings.
Following the correction in September 2024, sectoral leadership in the market rotated every two to three months. Sectors like auto and consumption took the lead, supported by tax and duty cuts, along with festive demand. Export sectors faced challenges due to tariff uncertainties, impacting IT services which saw a decline of 13.7%.
In 2025, the Nifty 50 index delivered a return of approximately 9%, with volatility playing a significant role. The India VIX index crossed the 20-mark multiple times in the first half of the year, peaking at 22.79 in April before stabilizing around 13.5 in the latter half. Another report by Standard Chartered highlighted positive indicators such as economic reflation, potential corporate earnings growth, and renewed foreign investor interest, suggesting a positive outlook for Indian equities in the coming years.
