India’s Equity Revival: 2026, a Turning Point

In the world of investing, few things are as constant as change, and yet, even the most seasoned investors can sometimes be blindsided by shifts in market dynamics. As we look ahead to 2026, one thing is becoming abundantly clear, India’s equity markets are primed for a robust comeback after a challenging period of underperformance. After years of impressive growth, India found itself facing a slowdown that has left many wondering if its economic juggernaut has lost steam. But as we enter the new year, the outlook for the Indian equity market is looking more optimistic.[EasyDNNnews:PaidContentStart]

India’s stock markets had a tough last year, with underperformance relative to global peers, particularly in USD terms. In fact, the country witnessed its worst relative performance since 1993. This stark underperformance is even more staggering when we consider that markets around the world, from the U.S. to emerging economies, have been riding a bull market, with returns between 20 per cent and 70 per cent. The reasons for this disconnect are multifaceted but can largely be attributed to three main factors: a slowdown in economic growth, record-high valuations, and the global shift towards AI-driven investments, in which India was a passive observer.

However, from the beginning of November 2025, India’s equity performance turned around, outpacing global indices by a solid 300 basis points over the last month. This resurgence can be attributed to a combination of bold policy moves and a shift in global market sentiment. India’s central Bank, led by the Reserve Bank of India (RBI), initiated a series of rate cuts, marking a significant pivot from its prior stance. In April 2025, the RBI not only cut rates but also reduced the cash reserve ratio (CRR), a move that has occurred only twice in India’s history. These policy actions, coupled with easing regulatory measures on the banking sector, set the stage for economic revival.

More importantly, India’s growth is already beginning to reflect in the real economy, reflected in a robust 8.2 per cent GDP growth in Q2 of FY 2025-26. This indicates that the stimulus provided by the RBI is making its way into the economy, further bolstered by government reforms and initiatives such as GST and infrastructure investments.

Furthermore, the narrative surrounding AI, which had been a headwind for India due to its lack of direct involvement in the sector, seems to be reaching its peak. While the AI trade was the darling of global investors, many now believe that much of the value has already been priced in. As the AI craze slows down, India can capitalise on this shift and emerge as a solid performer.

For investors, the message is clear: India’s equity markets, after a period of underperformance, are gearing up for a remarkable recovery. With favourable policy moves, improving economic indicators, and a global environment ripe for growth, 2026 could very well mark the beginning of India’s next equity market boom. For those who have stayed on the sidelines, now is the time to recalibrate and focus on India as a longterm growth story. With valuations more attractive and earnings growth poised to accelerate, the Indian market could prove to be one of the best investment opportunities in the coming years. This is the moment for investors to reassess, re-engage, and ride the next wave of India’s growth story.

RAJESH V PADODE
Managing Director & Editor

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