New Delhi: India’s economy is forecast to grow by 6.7% in FY26, supported by a cyclical recovery and stable market performance, according to a new report released on Thursday.

The cyclical recovery refers to the period after a slowdown or recession when economic activities, consumer spending, and business investments begin to rise again.

Over the past five years, India has experienced significant earnings growth, with the NIFTY index achieving a compound annual growth rate (CAGR) of 20%, the Lighthouse Canton report highlights. This robust growth indicates a strong foundation for India’s economy as it enters the next phase of recovery.

The country’s economic expansion will depend on key factors such as increased government capital expenditure, tax benefits for the middle class, and improved consumer demand. These elements are expected to boost earnings recovery and market confidence by 2025, offering a positive outlook for businesses and investors.

India’s investment-led expansion has been pivotal to its economic progress. While the government remains committed to fiscal discipline, private sector investments are anticipated to accelerate, contributing to long-term stability. The Reserve Bank of India’s recent 25-basis-point rate cut, the first in nearly five years, signals a supportive stance for sustained economic growth.

Global market trends, currency movements, and external factors such as the strength of the US dollar and rising global trade activity will also play a key role in shaping India’s financial landscape. The report noted that gold remains a preferred asset for investors amid global uncertainties, providing stability.

Additionally, stable crude oil prices are expected to benefit India’s import-dependent economy, providing relief from the volatility in global markets.