Indian Stock Market Outlook 2026
According to Kotak Securities, the Indian stock market is expected to rise in 2026, with the Nifty 50 index possibly jumping up to 24% to reach 32,032 by the end of the year. This prediction is based on a strengthened earnings outlook and resolute government action.
Base Case Scenario
In its base case scenario, Kotak Securities expects the Nifty 50 to rise 13% from its previous closing level of 25,758 to reach 29,120 by December 2026. The brokerage firm has listed several reasons why it has a favorable view of the Indian markets.
Reasons for Optimism
- Improved Earnings Outlook: Kotak Securities believes that its earlier concerns about high valuations and the risk of earnings downgrades have already played out, reducing downside risks and improving the overall market setup.
- Strong Domestic Fundamentals: The Indian markets have largely remained flat over the past 12-15 months, but domestic investor sentiment is likely to play a crucial role in determining the market's direction going forward.
- Government Support: The government's measures to increase disposable incomes, reduce tax burdens, and support job creation are expected to serve as a direct stimulus to domestic demand.
Preferred Sectors
Kotak Securities' preferred sectors include BFSI (Banking, Financial Services, and Insurance), Information Technology, Healthcare, and Hospitality.
Forecasted Growth
The brokerage firm expects a moderate pickup in earnings in FY26E, but anticipates a strong recovery in the net profits of the Nifty 50 index constituents in FY27E, supported by improving fundamentals and a relatively improving macro backdrop.
Nifty-50 Index net profits are expected to grow by 6.6% in FY25, 8.2% in FY26E, and 17.6% in FY27E.
Investment Strategy
Kotak Securities advises long-term investors to focus on quality stocks and add to their portfolios on dips, while being aware of potential risks such as geopolitical tensions, trade protectionism, and currency fluctuations.