Indian Equities 2026: Mixed Outlook Amid Macro Strengths & Concerns

• Despite 2025 being the worst-performing year in MSCI pack, India's macroeconomic health remains resilient with FY2026 GDP estimated at 7.4 percent.
• Positive factors include stable growth, falling inflation/interest rates, structural shift to equities via SIPs, and potential rerating due to falling oil intensity and rising service exports.
• Concerns include lopsided GDP growth concentrated in few services, weak private capex with utilization levels stuck at 70-75%, and the lingering threat of US tariffs.
• The full impact of GST reforms is expected from Q3 FY26, potentially leading to double-digit growth in 20 sectors and improved earnings quality.
• Artificial intelligence is projected to bring fresh challenges for the IT sector in 2026, impacting margins and hiring, while Nifty 50 trades at a premium to its 10-year average.

Why It Matters: Indian equities face a complex 2026, balancing robust macro fundamentals with valuation, capex, and global challenges.