Indian Equities Set For Resilience In 2026, Autos & Banks To Lead Outperformance

New Delhi: India’s equity markets are expected to remain resilient in 2026 amid global uncertainty, supported by strong domestic fundamentals, policy support and sector‑specific tailwinds, a new report has said. The report from BP wealth and STOXBOX forecasted that the domestic economy should continue to shine in the global context as “various India‑specific triggers are aligned in the right direction".

Among sectors, automobiles are expected to outperform with mid‑single‑digit to high‑single‑digit volume growth as demand benefits from easing inflation, softer interest rates and GST rationalisation, said the report. The banking sector is positioned for steady, scalable growth as lenders have rebalanced portfolios towards "secured Retail, Agriculture, and MSME (RAM) assets and gold-backed lending."

The government’s fiscal strategy is expected to focus on a sustained reduction in the debt‑to‑GDP ratio alongside prudent fiscal management. It added that cumulative 125 bps rate cuts, liquidity injections and macro‑prudential easing by the Reserve Bank of India provide “a strong growth runway.” Capital‑intensive sectors such as cement and metals should gain from government's infrastructure spending. Total cement demand is expected to rise about 6–7 per cent and steel demand roughly by 8 per cent. Pharmaceuticals are expected to deliver 8–10 per cent revenue growth, the report noted.

A recent report forecasted that India's benchmark index Nifty is set to touch 29,150 up from earlier expectation of 28,500 by December 2026, implying a return of 12 per cent year‑on‑year for CY26. Benign inflation and an improving demand environment, aided by fiscal and monetary measures will drive a turnaround in the domestic earnings cycle, it predicted. The brokerage, however, flagged high valuations, foreign institutional investor outflows and elevated US inflation and interest‑rate trajectories as key challenges. Indian equity markets touched record high on Friday, led by strong buying in metal, FMCG and auto stocks. Sensex gained 0.67 per cent, to settle at 85,762. The Nifty advanced 0.70 per cent, to close at 26,328.

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