Indian equity markets began 2026 on a strong footing, with benchmark indices extending gains on the second trading day of the year, supported by optimism around December-quarter corporate earnings and expectations of a growth-oriented Union Budget.
On Friday, the Nifty 50 settled at a record closing high of 26,328.55, rising 0.7 percent, while the Sensex ended 0.7 percent higher at 85,762.01, marginally below its all-time closing high recorded in September last year.
Gains were led by heavyweight stocks such as HDFC Bank, ICICI Bank and Reliance Industries, which pushed the benchmarks higher. Sectorally, financial services, oil and gas, and information technology stocks outperformed, while the Bank Nifty also registered a record close at 60,150.95.
Market participants said near-term direction will be shaped by the quality and breadth of earnings growth, domestic capital expenditure momentum, global liquidity flows and valuation comfort. Strong domestic participation and relatively low corporate leverage have continued to provide stability to the market, limiting the scope for sharp corrections despite valuation concerns.
India underperformed global peers in 2025
In 2025, the Nifty 50 delivered returns of around 12 percent, lagging several Asian peers. South Korea’s Kospi surged nearly 79 percent, Japan’s Nikkei 225 gained 28.6 percent, Hong Kong’s Hang Seng rose 32.5 percent, while Taiwan’s benchmark advanced close to 29 percent.
Market observers believe India’s relative underperformance last year was driven by global capital favouring select themes, while India remained largely anchored to domestic consumption and public capital expenditure. A shift in global risk appetite could potentially redirect flows back towards India in 2026.
Watchpoints for 2026
While domestic inflows remain supportive, some caution that emerging markets globally have seen highly correlated capital inflows in recent months, a trend that has historically preceded periods of correction. As a result, investors are closely monitoring global cues, foreign portfolio flows and macroeconomic developments.
Despite near-term uncertainties, steady domestic savings, resilient consumption trends and continued infrastructure spending are expected to remain key pillars supporting Indian equities in the new year.
Disclaimer
This article is for information purposes only and does not constitute investment advice. Financial markets are subject to risks, and past performance is not indicative of future results. Readers should consult their financial advisors before making investment decisions.
