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Informist, Wednesday, Jan. 7, 2026

 

MUMBAI – Experts at Emkay Global Financial Services expect calendar year 2026 to be the "comeback year" for Indian equities and they bet on a cyclical consumption-based recovery, fair valuations, and favourable macroeconomic conditions against slowdown in the western market. They expect the domestic equity market to reverse a year of sharp underperformance with respect to global peers in 2026. In 2025, the Indian equities gave 10% returns. The icing on the cake would be aritificial intelligence-based bets losing prominence in 2026 and India's lack of exposure working in its favour, the experts said. 

 

 

The brokerage sees the earnings per share growth for 2026-27 (Apr-Mar) bouncing back to 14% largely due to broad-based recovery in earnings. "This should help turn the tide on flows, and we expect positive outcomes on domestic and overseas flows – after a rough 1QCY26 (Jan-Mar)," Emkay said.

 

Experts at Emkay feel the optimism on 2026 is tempered by near-term risks, especially due to depreciation of the Indian currency and rising government bond yields. They expect that the weakness in the rupee will continue to strain domestic liquidity due to intervention by the Reserve Bank of India. This, combined with supply concern in government bonds, is expected to hurt monetary transmission across the yield curve and translate into stress on equity flows, both foreign and domestic investors.

 

Against this backdrop, Emkay expects the equity market to be volatile and sees sharp periodic sell-offs. In the worst-case scenario, the Emkay sees the Nifty 50 testing 24500-25000 points in Jan-Mar, a downside of over 4-6% from Wednesday's close of 26140.75 points. "..., though that (fall) would be temporary and an entry opportunity," Emkay said.  

The brokerage expects a revival in growth in 2026 on the back of the regulatory stimuli in the form of income tax cuts, monetary policy easing, and lower goods and services tax. "Consumption is the key driver, and we expect urban and discretionary spending to take the lead," Emkay said.

 

The investment cycle should also grow, led by central government spending, with private capital expenditure lending a helping hand. This feeds into the bet of earnings recovery in 2026-27 (Apr-Mar), with Nifty 50's earnings per share growth seen at 14%, driven by financials, discretionary, and technology. 
 

Emkay Global reiterated its December end target of 29000 points for Nifty 50, an upside of around 11%. They expect small- and mid-cap companies to outperform in 2026, based on higher earnings growth and relatively low valuation premium. "Smaller companies are delivering better growth across multiple sectors (staples, financials, tech), and we think the scope for alpha is higher in this segment," Emkay said. "Of course, the elevated valuations imply that investors will need to practice more caution when stock-picking in the SMID space," it said.  End

 

US$1 = INR 89.88

 

Reported by Gopika Balasubramanium

Edited by Akul Nishant Akhoury

 

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