Indian equity market posted a record tenth straight year of gains in 2025, defying all odds as its benchmark Nifty 50 index closed the year with 10.5% returns, thanks to a smart 6% surge in the final quarter of the year.
The year was a volatile one as investors grappled with multiple challenges, like the lack of a trade deal with the US, which has imposed the highest 50% tariff rates in Asia on India, a severe downfall in the Indian rupee and a massive selloff by the foreign portfolio investors (FPIs) amid lofty valuations and a slowdown in earnings.
On the negative side, these factors pushed the Nifty 50 to post its worst annual performance against Asian peers in almost three decades. According to a Bloomberg report, this is Nifty50’s biggest annual underperformance in the region since 1998.
“Indian equities have demonstrated strong structural resilience despite the absence of a sustained bull run. Looking ahead, the outlook for the next year is constructive and expected to be meaningfully better than the current one, driven by a gradual revival in corporate earnings as the lagged impact of fiscal and monetary tightening fades,” said Seshadri Sen, Head of Research and Strategy, Emkay Global Financial Services.
Nifty 50 target for 2026
This sentiment is echoed by several analysts and global brokerages who have now pegged the Nifty 50 target for 2026 at 29,000-30,000, implying up to 15% upside from the last closing level of 26,129.60 on Wednesday (December 31).
Santosh Meena, Head of Research at Swastika Investmart, said he holds a bullish outlook for 2026, projecting a revival in the broader market and a Nifty target of 30,000.
He sees a reversal in FII selling and valuation comfort in the bull case scenario, amid a cool-off in the “AI trade” in the US that also led to heavy selling.
“In 2025, Indian equities underperformed as global capital aggressively chased the “AI trade” in the US, leading to heavy FII selling. As the AI frenzy cools and valuations in India become attractive relative to global peers, we expect a reversal. A stable currency and comfortable valuations are likely to trigger robust FII inflows in 2026,” he added.
He also sees the impact of the various policy initiatives by the government kicking in, such as income tax rationalisation, GST cuts, and the RBI’s rate cuts/liquidity measures. 2026 could see the delayed positive impact of these policies reflected in asset prices, said Meena.
Vaqarjaved Khan, Senior Fundamental Analyst, Angel One, said a more realistic Nifty 50 target of 28,500–30,000 is likely in 2026, implying 10–15% returns, largely driven by earnings growth in sectors such as banking, telecom, autos, healthcare, and defence, rather than multiple expansion.
The rally is unlikely to be linear and would be marked by phases of consolidation, cautioned analysts.
Emkay Global’s Sen sees Nifty target of around 29,000 over the next 12 months, implying low double-digit upside. Any meaningful correction should be viewed as a buying opportunity, supported by improving earnings visibility from the second half of the year and a stable macro backdrop, he added.
Unlike 2025, the 2026 rally is expected to be more inclusive, lifting the broader indices alongside the Nifty and Sensex, said Meena. Global uncertainties, including potential US tariffs, slowing global growth, and evolving Fed policy, are likely to remain risks to the rally.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
