Mumbai/New Delhi: Indian equity markets are poised for a stronger recovery in 2026, driven primarily by a rebound in corporate earnings, favourable macroeconomic conditions and hopes of renewed foreign investor interest, according to the India Equity Strategy 2026: Earnings Redux report by Antique Stock Broking Ltd.
After a lacklustre 2025, which saw widespread earnings downgrades and net outflows of foreign portfolio investment, analysts now foresee a turnaround as earnings visibility improves and domestic economic fundamentals remain robust. The brokerage said that markets could benefit from India’s ongoing “Goldilocks phase” of sustained growth, moderate inflation and supportive policy settings, underpinned by fiscal and monetary support already in place.
Antique’s report highlights that the primary catalyst for a market upswing will be a recovery in corporate profitability, after 2025’s muted results dampened investor sentiment. Analysts see a pickup in earnings across key market segments, including financials, cyclical sectors and capex-linked industries, as corporate balance sheets improve and demand conditions normalise.
A number of factors are expected to support the earnings rebound: government and corporate capital expenditure momentum, strengthening consumption demand, and policy measures aimed at sustaining growth. Market participants are also watching finalisation of trade agreements with major partners such as the United States and the European Union as potential medium-term positives for the economy and markets.
Foreign portfolio investor flows, which were negative through much of 2025, are expected to stabilise and possibly reverse as global risk sentiment improves and earnings performance strengthens. Analysts say renewed FPI participation could add depth to the market’s uptrend, although global macro volatility remains a watch-point.
Domestic institutional investors, buoyed by retail participation and strong liquidity conditions, could further anchor market performance, analysts said. They also noted that benchmark indices, including the Nifty 50, have enjoyed recent gains and remain positioned to track earnings momentum and macro cues.
While financial services, consumer stocks and capex-linked sectors are expected to lead the market recovery, the IT sector’s earnings trend will be closely monitored, given its sensitivity to global demand conditions. Meanwhile, risks to the positive outlook include potential delays in earnings delivery, elevated valuations in pockets of the market and continued sensitivity to global investor flows.