Indian mkts to see steady rise in FY26

Mumbai: India’s capital markets are projected to grow steadily in FY26, supported by expected GDP growth of 6.2–6.5 per cent and strong domestic demand, according to a new report released on Tuesday.

The Nifty 50 is anticipated to deliver 12-15 per cent returns, with EPS estimates around Rs 1,160. While, foreign portfolio investors (FPI) have shown renewed confidence, injecting over $4 billion in recent sessions, according to smallcase managers.

Global trade tensions, US tariffs, geopolitical uncertainty remains a key risk for Indian capital market. However, they expect equities to outperform other asset classes in FY26, supported by favourable valuations and a strong growth outlook.

“As of May 18, a total of 878 companies have reported their earnings, with a 10 per cent year-on-year growth in Q4 FY25,” said Shailesh Saraf, smallcase Manager and Founder, Value Stocks. Despite a modest 5.79 per cent year-on-year growth for FY25 — significantly lower than the 35.1 per cent growth recorded in FY24, the market sentiment has improved, reflected in FII net inflows of Rs 16,757 crore in FY26 so far, alongside an 8 per cent return from the Nifty 50 and a 10 per cent gain in the Smallcap 100 index, Saraf mentioned.

The market has bounced back significantly over the past two months, fully reversing its year-to-date decline. The smallcase managers believe that with inflation below 4 per cent, the real interest rate has turned significantly positive, strengthening the case for policy easing.