2026: India's Stock Market Set for 'Goldilocks' Year, 11% Return Expected

• HDFC Securities predicts 2026 will be a 'Goldilocks' year for the Indian stock market, characterized by balanced and favorable conditions.
• The market is expected to yield an 11% return, with Nifty companies' earnings growing by 16% in FY2027, targeting Nifty at 28,720.
• Key drivers include strong economic growth, falling interest rates, rupee stability, reduced global risks, and supportive RBI/government policies.
• Sectors like metal, banking, financial services, capital goods, and defense are projected to perform well, with the metal sector benefiting most.
• Foreign investment is anticipated to return to India, and AI will be a major theme, though unfulfilled AI expectations pose a risk of volatility.

Why It Matters: India's stock market is poised for a strong 2026 with an 11% return, driven by favorable economic conditions.