Despite lingering global uncertainties, Indian equities could still deliver another 10 percent upside in 2026, driven by a favourable mix of earnings growth and domestic liquidity, according to Siddharth Vora, Head of Investment Strategy at PL Asset Management.
Vora believes that while global macro challenges—such as slowing growth in developed markets and geopolitical risks—may continue to create volatility, India’s domestic fundamentals remain relatively resilient.
Earnings Momentum Key to Market Upside
According to Vora, the next leg of the market rally will be earnings-led rather than valuation-driven. Companies with strong balance sheets, operating leverage, and pricing power are better placed to surprise positively on earnings.
“Domestic-facing sectors are in a relatively stronger position,” he said, adding that firms focused on the Indian economy are less vulnerable to external shocks compared to export-heavy businesses.
Liquidity Still a Powerful Support
Another critical pillar supporting markets is ample domestic liquidity. With steady inflows from SIPs, insurance companies, and provident funds, local investors continue to offset foreign portfolio investor (FPI) volatility.
Vora noted that this structural shift—where domestic capital plays a larger role in market stability—has changed how Indian markets respond to global risk-off phases.
Sector Preferences: Balance Sheets Matter
In 2026, Vora expects investors to increasingly favour:
- Companies with strong balance sheets
- Businesses offering operating leverage
- Sectors aligned with domestic consumption and investment
Such companies, he said, are more likely to deliver positive earnings surprises, even if headline economic growth remains uneven.
Outlook for 2026
While Vora remains cautious on near-term global risks, he sees India’s medium-term story intact. Reasonable earnings growth, healthy domestic liquidity, and selective stock picking could still allow markets to generate meaningful returns, even after recent highs.
Bottom Line
According to PL Asset’s Siddharth Vora, 2026 may not be a straight-line rally, but earnings resilience and domestic liquidity could still push markets higher by around 10 percent, provided investors stay selective and focus on fundamentally strong businesses.
