New Delhi, Dec 2 (NationPress) The Nifty index is projected to reach the 29,300 mark by 2026, reflecting an approximate 12% increase from its current position. This growth is anticipated due to a reduction in global geopolitical tensions, strong domestic macroeconomic indicators, and a cyclical recovery in earnings, according to a report released on Tuesday.

As per Nomura's analysis, India's equity valuations have finally stabilized within a more rational range after almost 14 months of lagging behind global markets. This adjustment offers long-term investors a more favorable entry point and sets the stage for a wider market resurgence.

The positive sentiment aligns with a record-breaking week on Dalal Street, where both the Nifty 50 and Sensex achieved new all-time highs of 26,300 and 86,100, respectively. The Bank Nifty also made history by surpassing the 60,000 threshold for the first time.

Nomura highlighted that robust domestic inflows continue to serve as a stabilizing factor.

Equity allocations are holding steady at around 13% of gross financial savings in FY25. Primary market issuances are absorbing nearly 78% of that liquidity without disrupting the overall market sentiment.

While the firm does not foresee a significant surge in foreign institutional participation, it does anticipate potential incremental gains if the global AI-driven rally stabilizes and risk premiums remain manageable.

On the earnings side, the brokerage expects a recovery to low double-digit growth in FY26, supported by a favorable base and a revival across commodity-linked sectors such as chemicals, oil and gas, cement, and metals.

However, it warns that consensus forecasts for FY27 and FY28 could see modest downward adjustments if the capital expenditure cycle weakens or if India's trade deficit remains persistently elevated.

India’s financial markets are entering 2026 with renewed optimism.

Previously, PL Capital noted that India's financial markets are progressing into 2026 with enhanced confidence, buoyed by a significant recovery in October and a macroeconomic landscape that continues to show resilience amid global uncertainties.

After three months of limited movement, benchmark equity indices surged, with the Nifty 50 and Sensex posting gains of 4.5% and 4.6% respectively – marking their strongest performance in several months.

This sudden turnaround was driven by various domestic catalysts, including the GST 2.0 rate adjustments that encouraged consumption across discretionary sectors, a spike in manufacturing activity indicated by a two-month high PMI of 58.4, and the return of foreign institutional investors, who have become net buyers after a prolonged period of outflows, as reported by PL Capital.

The signing of the Trade and Economic Partnership Agreement (TEPA) with EFTA nations further propelled momentum by granting tariff-free access to crucial European markets, thereby enhancing India’s long-term export prospects.