Indian stock market: How 2026 is likely to be better than 2025? Explained

In 2025, the domestic market began with a cautious positive approach. This caution stemmed from FII selling activity from October to December 2024, high valuation, a downgrade in corporate earnings due to moderated demand, and a lack of government & private capex. Optimism, meanwhile, was grounded in a vibrant domestic economy, the forecast for reduced interest and inflation rates in 2025, and non-recessionary global pressures. However, the level of optimism diminished as the global “tariff war” extended beyond expectations, causing India to shift from a favourable to an unfavourable tariff list with higher rates. Global risks expanded with the Israel-Hamas…