Sectorally, the brokerage expects a revival in private capital expenditure to emerge as a key investment theme in 2026. Financials, particularly banks, asset management companies and insurance firms, are also expected to benefit from an earnings upcycle supported by domestic macro stability
New Delhi: Indian equity markets are set for a stronger performance in 2026, backed by a possible recovery in corporate earnings, improving macroeconomic conditions and a potential revival in foreign investor flows, according to India Equity Strategy 2026: Earnings redux report by Antique Stock Broking Limited.
Antique expects India’s “Goldilocks” phase, characterised by robust growth, moderate inflation and supportive policy, to continue, aided by measures already undertaken by the government and the Reserve Bank of India.
Corporate earnings are expected to re-accelerate sharply. Nifty earnings are projected to grow at around 16% CAGR over FY26-FY28, compared with roughly 7% over the previous two years.
India’s macro backdrop is unusually supportive. Real GDP growth is expected to remain around 7.5%, inflation is forecast to stay benign, and the current account deficit is projected below 1% of GDP. A stable currency outlook and easing global monetary conditions reduce one of the biggest risks FPIs worry about sudden macro shocks.
The brokerage also highlights the expected finalisation of bilateral trade agreements with the US and the European Union as a key positive for the medium-term economic and market outlook.
“CY26 may turn out to be a better year for the broader Indian markets as corporate earnings and FPI flows may make a comeback (key pain points in CY25). India’s ‘Goldilocks’ phase is likely to continue in CY26 given the right policy intervention already undertaken by the Government and RBI along with the expected finalisation of bilateral trade agreement with the US and EU in the near term,” the report read.
Earnings growth is central to the 2026 market thesis.
Antique projects Nifty earnings per share (EPS) to grow at a compound annual growth rate of 16 per cent over FY26-FY28, a marked improvement from the subdued earnings growth recorded in the preceding period.
The brokerage also notes that corporate earnings tend to track wholesale price inflation and nominal GDP growth, both of which are expected to normalise, creating a supportive backdrop for profitability across sectors.
Sectorally, the brokerage expects a revival in private capital expenditure to emerge as a key investment theme in 2026. Financials, particularly banks, asset management companies and insurance firms, are also expected to benefit from an earnings upcycle supported by domestic macro stability.
In addition, Antique identifies select discretionary consumption segments, along with some chosen mid- and small-cap stocks, as areas likely to be in focus for investors.
The Antique report also anticipates a revival in FPI equity inflows in 2026, supported by, among others, reasonable valuations relative to other markets. Alongside steady domestic inflows, these factors could reinforce an earnings-led recovery in Indian equities in 2026 following the volatility seen in the previous year, it reiterated.
“Indian equities are in a mature bull market with overall indices trading near their 52-week high, however, sharp sectoral divergence exist,” Antique noted.
FPIs pulled out about USD 17.5 billion from Indian equities in 2025, the highest annual outflow on record in absolute terms. The selling reflected weak earnings momentum, global risk aversion, and better relative opportunities in AI-heavy markets, the report highlighted.
Highlighting the exposure of the global investors towards AI, the report said they are increasingly allocating capital to markets and companies with direct AI exposure including semiconductors, advanced hardware, cloud infrastructure, and AI-native platforms.
The US, Taiwan, and parts of East Asia dominate these value chains. India, despite strong domestic growth, remains largely an AI user rather than an AI producer at scale. This creates a mismatch between where global capital wants exposure and where India’s strengths lie.
The report further noted that the AI risk does not hit all Indian sectors equally.
Capital-intensive, domestic-cycle sectors such as banks, infrastructure, and consumption may continue to perform locally.
But technology services, traditional exporters, and index-heavy sectors could face relative neglect if they lack credible AI monetisation stories. This may widen sectoral divergence within Indian markets.