New Delhi, Jan 7 (NationPress) The narrative surrounding India’s equity markets in 2026 is anticipated to transition from broad-based rallies to a focus on selective, fundamentals-driven opportunities, as investors contend with inflated valuations and uneven global growth, according to a recent report released on Wednesday.

While robust domestic macroeconomic conditions and a gradual recovery in earnings are expected to provide support, data compiled by Client Associates indicates that disciplined stock selection will be essential for navigating the upcoming year.

The asset management firm noted that India’s equity markets are likely to be bolstered by strong domestic demand and improving macroeconomic indicators, with a gradual recovery in corporate earnings projected through 2026.

However, it cautioned that global uncertainties and high valuations might limit short-term gains, making the careful selection of fundamentally strong companies vital for investors.

The report suggested that India’s economic outlook remains positive, with GDP growth for FY26 revised upwards to 6.8 percent despite increasing geopolitical risks.

This growth is expected to foster sustained domestic demand, enhance revenue visibility for companies, and improve earnings potential, particularly in consumption-driven sectors.

Client Associates predicted that the BSE Sensex could reach 93,918 by December 2026, supported by improving earnings and favorable domestic conditions.

Additionally, the report emphasized commodities like gold and silver as important diversifiers for portfolios, while advising caution on new investments in silver following its recent sharp increase.

The firm also highlighted that reduced tax burdens and supportive government reforms have increased disposable incomes, leading to higher spending and savings across sectors such as automobiles, insurance, and financial products. This trend is expected to persist, supporting consumption-driven stocks in the medium term.

Nitin Agarwal, Head of Investment Research at Client Associates, stated that equity markets in 2026 are likely to favor disciplined investing. He remarked that while India's domestic strengths and improving earnings outlook remain advantageous, investors should concentrate on fundamentals due to global uncertainties and high valuations.

“In 2026, equity markets are expected to be less influenced by broad-based rallies and more by selective opportunities founded on fundamentals. While India’s domestic macro strength and improving earnings outlook are supportive, high valuations and global uncertainties necessitate a disciplined approach,” Nitin Agarwal commented.

The report also anticipates that earnings growth for Sensex companies will remain subdued in the near term before improving over the medium term, aided by better macroeconomic conditions and accommodating monetary policy. It added that certain sectors are likely to outperform as the market transitions to a more selective, fundamentals-led phase.