Stock market outlook 2026: The Indian capital market is poised for growth in 2026, driven by domestic fundamentals, earnings recovery, and policy stability. The central theme for FY26 is an improving earnings cycle, supported by resilient consumer spending, sustained credit growth, and a gradual recovery in private capital expenditure.
Banking, financial stocks in focus
Banking and financial services are expected to be the primary driver of development, with large private banks and select public sector banks benefiting from strong loan demand, improving asset quality, and stable margins. HDFC Bank, ICICI Bank, State Bank of India, Union Bank, and Kotak Mahindra Bank are well-positioned to capitalise on this cycle. At the same time, Bajaj Finance continues to benefit from deep penetration in retail credit and digital lending.
Consumption-linked sectors
Consumption-linked sectors are emerging as a powerful driver, aided by rising disposable incomes, improving rural demand, and policy tailwinds. Auto and consumer discretionary names, such as Uno Minda, Tata Motors’ commercial vehicle, and Mahindra & Mahindra, stand to gain from a recovery in passenger vehicles, SUVs, and rural-focused segments. FMCG leaders, such as Hindustan Unilever and Britannia, offer steady earnings visibility and defensive stability during volatile phases. Infrastructure, Defence, and capital goods form another important pillar, with companies like BEL, JSW Infra, and Larsen & Toubro enjoying strong order books and long-term execution visibility.
Telecom, IT segment
The telecom sector adds a structural growth layer, with Bharti Airtel benefiting from higher ARPU, data consumption, and 5G monetisation. The IT sector is expected to play a supporting role, with prominent IT names like TCS and Infosys offering comfort through strong balance sheets, high cash generation, and improving medium-term growth visibility.
Oil, energy stocks
Additionally, the metal and energy sectors are poised for growth, driven by increasing demand for infrastructure and renewable energy. Companies such as Tata Steel, JSW Steel, Hindalco, SJVN, Power Grid, and NTPC are well-positioned to benefit from these trends. Coal India and Oil India are also expected to benefit from the increasing energy demand.
These stocks are poised to benefit from strong credit growth, stable margins, and improving earnings visibility.
Overall, the FY26 market story is likely to be broad-based but earnings-led, where quality large caps anchor portfolios while select sectors drive alpha. With policy stability and domestic fundamentals driving growth, the Indian equity market is expected to deliver steady returns in 2026. With strong domestic flows through mutual funds, improving corporate profitability, and relatively contained macro risks, the Indian equity market appears well-positioned for a measured but sustainable uptrend.
Stocks to buy
Here’s full list of stocks that one can look at in 2026:
1] Banking: HDFC Bank, ICICI Bank, SBI, Union Bank, and Kotak Mahindra Bank.
2] Consumer stocks: Uno Minda, Tata Motors, Mahindra & Mahindra, HUL, Bharti Airtel, and Britannia.
3] Defence stocks: BEL, JSW Infra, and Larsen & Toubro.
4] IT stocks: TCS and Infosys.
5] Metal stocks: Tata Steel, JSW Steel, Hindalco.
6] Oil, energy and Power stocks: SJVN, Power Grid, NTPC, Oil India, and Coal India Ltd.
(Author is Senior Research Analyst at SMC Global Securities. Views expressed are completely personal. Live Mint don’t endorse any of the ideas shared by the author in this article)