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What is the story about?
Market strategists remain constructive on Indian equities heading into 2026, citing an improving earnings outlook, supportive flows and sector-specific opportunities.
Surendra Goyal of Citi expects the earnings growth trajectory to improve in 2026, led by financials. Bottom-up estimates also point to a recovery across consumer and industrial sectors.
He believes the risk-reward for equities remains favourable, which should support returns for the Nifty and MSCI India.
Relative valuations, the possibility of a US trade deal, and a broadening of global equity participation beyond AI-driven stocks are seen as additional positives.
In 2025, foreign investors pulled out $18 billion, while domestic institutional investors added $90 billion. Primary market fund-raising crossed $30 billion during the year. Sector-wise, telecom, commodities and banks outperformed, while IT stocks lagged.
Citi has set a December 2026 Nifty target of 28,500, implying an upside of about 10%.
Mahesh Nandurkar of Jefferies said earnings per share growth will remain the most important driver of stock performance in CY26. His 30-stock model portfolio is expected to deliver EPS growth of 21% in FY27, compared with 16% for MSCI India.
He added that paying a modest premium for visible growth makes sense. While the model portfolio trades at a slightly higher PE of 23x versus 22x for MSCI India, it has a lower PEG ratio of 1.1x compared with 1.4x.
Jefferies' top picks for CY26 include Axis Bank, Bharti Airtel, Cholamandalam Investment and Finance Company, TVS Motor Company, Mahindra And Mahindra , Ambuja Cements, Lodha Developers and Godrej Properties, Max Healthcare, JSW Energy and GMR Airports.
Ridham Desai of Morgan Stanley expects an action-packed quarter ahead. He sees earnings beating expectations, the RBI continuing with deregulation, more reforms from the government and the possibility of a trade deal with the US.
Morgan Stanley remains overweight on lenders and discretionary consumption, which are expected to benefit from India's relative outperformance.
Surendra Goyal of Citi expects the earnings growth trajectory to improve in 2026, led by financials. Bottom-up estimates also point to a recovery across consumer and industrial sectors.
He believes the risk-reward for equities remains favourable, which should support returns for the Nifty and MSCI India.
Relative valuations, the possibility of a US trade deal, and a broadening of global equity participation beyond AI-driven stocks are seen as additional positives.
In 2025, foreign investors pulled out $18 billion, while domestic institutional investors added $90 billion. Primary market fund-raising crossed $30 billion during the year. Sector-wise, telecom, commodities and banks outperformed, while IT stocks lagged.
Citi has set a December 2026 Nifty target of 28,500, implying an upside of about 10%.
Mahesh Nandurkar of Jefferies said earnings per share growth will remain the most important driver of stock performance in CY26. His 30-stock model portfolio is expected to deliver EPS growth of 21% in FY27, compared with 16% for MSCI India.
He added that paying a modest premium for visible growth makes sense. While the model portfolio trades at a slightly higher PE of 23x versus 22x for MSCI India, it has a lower PEG ratio of 1.1x compared with 1.4x.
Jefferies' top picks for CY26 include Axis Bank, Bharti Airtel, Cholamandalam Investment and Finance Company, TVS Motor Company, Mahindra And Mahindra , Ambuja Cements, Lodha Developers and Godrej Properties, Max Healthcare, JSW Energy and GMR Airports.
Ridham Desai of Morgan Stanley expects an action-packed quarter ahead. He sees earnings beating expectations, the RBI continuing with deregulation, more reforms from the government and the possibility of a trade deal with the US.
Morgan Stanley remains overweight on lenders and discretionary consumption, which are expected to benefit from India's relative outperformance.
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