A leading domestic brokerage firm has projected a Nifty base-case target of 28,100 for December 2026, expecting Indian equity markets to transition decisively from a phase of valuation-led consolidation to an earnings-led cycle in 2026.
The firm highlights several key factors that are likely to drive this growth, including earnings cycle recovery, domestic growth momentum, and the impact of reallocation from global AI trade.
Corporate earnings are at an inflexion point, with consensus estimates indicating a significant rebound in growth. Earnings are expected to accelerate at a pace of 12–15% year-on-year over FY26–27.
India’s growth trajectory continues to show strength heading into 2026, with GDP growth forecasts for H1 FY27 revised upward to 6.7–6.8%.
A reversal in the global “AI trade,” with capital rotating away from heavily concentrated US mega-cap AI stocks to broader, valuation-sensitive markets, is seen as beneficial for Indian equities.
The rupee experienced sharp depreciation in 2025, but the firm expects a potential rebound in the currency, supported by stronger domestic growth and the RBI’s management of forex reserves.
A key global variable highlighted in the report is the resolution of elevated tariffs imposed by the United States on Indian imports, which could be a meaningful catalyst for improving FII sentiment and boosting export volumes.
Domestic Institutional Investors (DIIs) now act as a powerful stabilising force against intermittent foreign outflows, providing sustained liquidity and reducing the market’s dependence on global capital flows.
Despite the constructive outlook, the firm cautions that certain challenges could potentially derail market performance in 2026, including delays in resolving the US–India tariff situation and further depreciation of the rupee.
The report lays out five investment themes expected to outperform over the next 12 months, including financials, domestic consumption plays, selective cyclicals, healthcare, and a multi-cap approach.
The firm has identified nine stocks as part of its “New Year Picks 2026” framework, reflecting its preference for quality names with strong earnings visibility and alignment with structural growth drivers.
Remember, this is a perspective, not a prediction. Do your own research and consider your own risk tolerance before making any investment decisions.
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