India’s equity market hits new record as foreign inflows revive and earnings strengthen

India’s benchmark equity index touched a fresh record high on Thursday, supported by renewed foreign investor interest, stabilizing corporate earnings, and optimism over improving macroeconomic conditions.

The Nifty 50 Index climbed as much as 0.74% to 26,246.65 in Mumbai, surpassing its September 2024 peak and becoming one of the final major global markets to set a new all-time high this year.

Foreign inflows return amid improving sentiment

Overseas investors resumed net purchases of Indian equities in October after three consecutive months of withdrawals.

Global funds have invested a net $1.3 billion since the beginning of last month, encouraged by better earnings results, lower consumption taxes, and progress in trade negotiations with Washington.

“We’re seeing a powerful resurgence, driven by strong festive consumption, stabilizing earnings, and a clear revival in foreign investor appetite,” said Siddharth Vora, fund manager at PL Asset Management in a Bloomberg report.

He added that these factors improve the broader risk–reward balance for Indian markets.

Corporate results for the September quarter came in “slightly ahead” of expectations, according to Citigroup.

Consensus earnings forecasts, which had been trimmed over an extended period, are now showing signs of stabilizing.

Bloomberg Intelligence data indicates that earnings for MSCI India constituents are expected to grow 15.9% in 2026, compared with only about 2% this year.

Global banks turn bullish despite valuation concerns

The strengthening recovery has prompted major global financial institutions to adopt a more constructive view on Indian markets.

Both Morgan Stanley and Goldman Sachs have shifted to a bullish stance, citing improving profit trends and supportive policy momentum.

Morgan Stanley expects India to overcome its period of relative underperformance against emerging-market peers and forecasts the BSE Sensex to rise by 13% by the end of 2026.

Analysts Ridham Desai and Nayant Parekh wrote that India’s policy pivot is laying the groundwork for a rebound in nominal growth and corporate earnings after a mid-cycle slowdown.

The firm assigned a bull-case target of 107,000 for the Sensex by December 2026—an almost 26% upside from current levels.

Goldman Sachs also upgraded India to Overweight and projected the Nifty 50 to reach 29,000 by December 2026, implying an 11% rise.

The brokerage noted that Indian equities, which lagged global peers through 2024, appear well positioned for a reversal as policy support strengthens and macroeconomic pressures ease.

Potential Reserve Bank of India rate cuts, improved liquidity, bank deregulation, GST adjustments, and a slower pace of fiscal consolidation are among the factors expected to bolster performance.

Market momentum builds despite lingering risks

India remains on course for a record tenth consecutive year of annual equity gains, buoyed by nearly $78 billion in domestic institutional investment and steady retail participation.

Yet the market still trails regional benchmarks: MSCI India is underperforming its emerging-market counterpart by the widest margin since 1993, partly due to the global rally in AI-related stocks—an area where India has comparatively lower exposure.

Even so, analysts say the country’s defensive market positioning, improving corporate fundamentals, and policy continuity continue to attract investors seeking alternative growth opportunities in Asia.

As foreign inflows return and earnings momentum firms, India’s equity market enters the final stretch of the year with renewed confidence and stronger expectations for 2026.

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