Market 2026: Experts Predict Strong Returns, FII Inflow, Sector Rotation

• Market stalwarts Prashant Khemka (White Oak Group) and Nilesh Shah (Kotak AMC) are bullish on 2026, expecting strong returns driven by robust economic fundamentals and potential 7% growth in FY26.
• FIIs are expected to return to the Indian market in 2026, driven by a falling dollar, potential shifts from China, and increased flows into emerging markets, boosting corporate earnings.
• Sector rotation is anticipated, with consumer discretionary, financial sector, and midcap IT companies poised for strong performance due to increased liquidity and AI adoption.
• Public sector banks are favored due to higher liquidity and deposits. The chemical sector also looks promising from a 3-year perspective as China closes loss-making units.
• Midcaps are projected to offer the best returns in 2026, followed by large caps, potentially outperforming small caps. Double-digit returns are expected across all cap sizes.

Why It Matters: Experts foresee robust market returns in 2026, fueled by FIIs, strong economy, and strategic sector rotation.