Annual Investment Outlook 2026

The year 2025 can be best characterized as an eventful and challenging year with the headline indices returning double-digit returns and extending their winning streak to 10 years in a row. This was on the back of many initiatives and events that continued to dominate headlines ranging from interest rate cut, tax rate cut, sovereign rating upgrade for India, accelerated rupee depreciation, all-time high SIP inflow among others. With such a steady flow of positive headlines, the expectation was for India’s financial markets to comfortably tide over the hurdles in 2025. But reality was starkly different. We grappled with weak earnings growth, compression in the valuation picture along with an uncertain global backdrop. The investor experience turned out to be uneven with small & midcap returns being lower than the frontline index. With this background of how 2025 turned out to be, the key question to ask would be – How will markets react in 2026?
The answer to that can best be described by three words – Reboot, Refresh, Reclaim!