The NSE Nifty 50 index is currently hovering near its all-time high, reached on November 20, 2025, fueled by renewed foreign investor interest and healthy corporate earnings. However, on November 21, the index experienced a pullback, slipping nearly 0.7% to an intraday low of 26,055.95, as volatility increased across global markets. Despite this recent dip, optimism remains about the Indian stock market's prospects, with several global brokerages offering their outlook for 2026.

Factors Driving the Market

Several factors have contributed to the recent surge in the Indian stock market. Foreign institutional investors (FIIs) have turned net buyers in October 2025, adding nearly $1.3 billion, supported by stronger earnings expectations, lower consumption taxes, and progress in India-US trade negotiations. India Inc. has also reported healthy quarterly results, further boosting market sentiment. Strong festive consumption and stabilizing earnings have also contributed to the resurgence.

Global Brokerage Outlooks for 2026

Several global brokerages have released bullish reports on the Indian stock market, projecting significant growth by the end of 2026.

• Goldman Sachs: Upgraded Indian equities to "overweight," setting a Nifty 50 target of 29,000 by the end of 2026, implying a 14% upside from the previous close. They anticipate a rebound driven by stabilizing earnings and easing financial conditions. Goldman Sachs expects financials, consumer staples, durables, autos, defense, oil marketing companies and internet and telecom firms to lead this recovery.
• Morgan Stanley: Expects Indian equities to reverse their underperformance against emerging market peers and forecasts the BSE Sensex to gain 13% by the end of 2026. They project a base-case Sensex target of 95,000 by December 2026, with a 50% probability. In a bull-case scenario, they foresee the Sensex reaching 107,000, driven by low oil prices, favorable global trade shifts, supportive policies, and strong economic growth. However, in a bear-case scenario where crude spikes above $100 and there is a global slowdown, they see the Sensex at 76,000.
• HSBC: Projected that Indian equities could deliver around 10% annual returns through 2026, assigning a year-end 2026 Sensex target of 94,000.
• JPMorgan: Expects the Nifty 50 to trade between 26,500 and 30,000 over the next nine months, driven by an earnings recovery.
• Emkay Global Research: Maintained a Nifty 50 target of 26,000 for March 2026, anticipating a recovery in consumption, improvement in retail credit, and a steady decline in commodity prices to help boost earnings.

Key Factors for Market Performance

The positive outlook for the Indian stock market in 2026 is based on several key factors:

• Policy Support: Pro-growth policies from fiscal and monetary authorities, including rapid rate cuts by the Reserve Bank of India (RBI), relaxed banking regulations, and government initiatives like GST and income tax cuts.
• Earnings Recovery: Expectations of a recovery in earnings growth of Indian companies, with potential for double-digit profit growth in 2026.
• Foreign Investor Re-entry: Signs of a turnaround in foreign portfolio investment, supported by strong domestic institutional buying and steady retail inflows.
• Reasonable Valuations: Correction in relative valuations, making Indian equities more attractive compared to emerging market peers.
• Strong Domestic Market: Continued strength in the domestic market, driven by retail participation and systematic investment plans (SIPs).
• Macro Stability: Gains in macro stability via fiscal consolidation, increased private investment, and a positive gap between real growth and real rates.
• Robust domestic growth, steady global growth and benign oil prices.

Potential Risks and Concerns

Despite the overall positive outlook, several potential risks and concerns could impact the Indian stock market in 2026:

• High Valuations: India's high valuation compared to other emerging markets remains a concern for some investors.
• Global Economic Slowdown: A deeper global slowdown or a US recession could negatively impact the Indian market.
• Crude Oil Prices: A sharp rise in crude oil prices could lead to policy tightening by the RBI and dampen market sentiment.
• Trade tensions: Deterioration in trade conditions between India and the US could trigger a market fall.
• Market Volatility: Increased market volatility, as seen recently, could lead to corrections and impact investor confidence.

Conclusion

The Indian stock market is poised for a strong recovery in 2026, driven by supportive policies, improving earnings, and renewed foreign investor interest. While potential risks remain, the overall outlook is positive, with global brokerages projecting significant growth for the Nifty 50 and Sensex. Investors are advised to focus on high-quality stocks and maintain a long-term perspective, while also being aware of potential risks and market volatility.