Indian Equity Markets Face Challenges in 2025 but Show Signs of Recovery in 2026

Indian equity markets faced challenges in 2025 with foreign institutional investor outflows and subdued earnings growth, leading to underperformance compared to global peers. However, domestic retail participation, especially through systematic investment plans (SIPs) and mutual funds, has surged, providing market stability. Experts anticipate a cyclical earnings recovery in 2026, driven by strong GDP growth, monetary easing, and capital expenditure revival, with selective opportunities in smallcaps and continued emphasis on quality stock selection amid global uncertainties.