IANS Year Ender 2025: Indian equities recover in 2025 after correction, earnings, rate cuts key in 2026
Mumbai, Dec. 28 (IANS) – As India heads into 2026, the equity market is entering a pivotal phase. After a period largely driven by robust domestic liquidity, investors are now looking more closely at earnings performance, policy stability, and the overall health of the economy—factors that could shape how Indian stocks fare this coming year.
The 2025 trading year left investors with a mixed bag of outcomes. The Nifty 50 hit a record close of 26,326 on December 1, and the index ended the year up more than 10 percent. The Sensex, meanwhile, registered roughly an 8 percent gain over the same period. Despite these positive returns, the market endured sharp volatility, policy uncertainties, and global headwinds, which made the year a testing time for participants.
Inflation has been a key driver of market sentiment. After falling to a record low in October, the consumer price index edged up slightly in November, though it remains comfortably below the Reserve Bank of India’s (RBI) medium‑term target of 4 percent. This cushion has allowed the RBI to keep growth-supportive by holding rates low. The central bank recently cut the repo rate by 25 basis points and signalled that it is willing to maintain an accommodative stance as long as inflation stays under control. RBI projections indicate that CPI inflation will average about 2.9 percent in the three‑month period ending March, even as it has been gradually rising since January.
Brokerage firms are already spotting a cyclical recovery. In a note, Axis Direct highlighted that corporate earnings are improving, with growth becoming clearer across financial services, consumption‑driven businesses, and capital‑intensive sectors. According to the firm, India stands out among large global markets in which a cyclical rebound aligns with long‑term structural growth drivers, creating a supportive backdrop for equities over the medium to long term.
Axis Asset Management Company (AMC) echoed this sentiment, describing 2026 as a year of renewed energy for Indian markets. The company noted that equities have bounced back from last year’s correction and that valuations are moving closer to historical averages. India’s valuation premium relative to peers has narrowed, while earnings appear to have bottomed out and are showing early signs of recovery.
Axis AMC also pointed to strong policy support—including rate cuts, liquidity injections, accelerated government capital spending, and roughly Rs 1.5 trillion in GST reductions—as well as improving global conditions, easing geopolitical tensions, and the possibility of an India‑US trade deal that could further bolster investor confidence.
Analysts remain more optimistic about 2026 than in the previous year. They argue that fading concerns over India‑US trade ties could lift exports and draw foreign investors back into Indian equities. Corporate earnings are expected to sharpen, thanks to higher government spending, stable GST collections, and the impact of personal income tax relief. Easier monetary conditions, robust credit growth, ample banking liquidity, and improving rural incomes are all likely to sustain demand.
Across sectors, the research community is identifying opportunities in financial services, automotive, select consumer brands, industrials, pharmaceuticals, and telecom. Hotels and healthcare are also poised to benefit from rising consumption and stronger economic activity. Improved corporate and banking balance sheets, coupled with a favorable base effect, may further support earnings growth in the coming year.
Stay informed on all the latest news, real-time breaking news updates, and follow all the important headlines in world News on Latest NewsX. Follow us on social media Facebook, Twitter(X), Gettr and subscribe our Youtube Channel.
