Indian equities have markedly underperformed in 2026, but resilient domestic growth, investment and manufacturing momentum suggest a cyclical pause rather than a structural break. Valuations have reset but broader earnings upgrades and a sustained easing of foreign selling are still needed to support a new overall market call.

 

Our latest PERSPECTIVES Special report, however, explains why we see selective opportunities across Industrials, Utilities, Financials, Healthcare and Materials

 

Key takeaways

  • MSCI India has fallen -16% in USD terms YTD in 2026, amid moderating earnings momentum, limited technology exposure, rising oil prices, INR weakness and persistent foreign selling.
  • Improving domestic economic activity, broadening earnings growth, sustained government capex and manufacturing incentives create scope for a gradual recovery over the medium term.
  • Until then, we favour selective exposure to Industrials, Utilities, Financials, Healthcare and Materials. Demanding valuations in some structural growth segments, however, continue to make stock selection critical.

 

 

The PERSPECTIVES Special is currently available and client-ready for the following regions: Germany, Americas, Europe, Middle East, Africa and Asia Pacific.

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