Indian equity markets have remained broadly range bound for nearly eighteen months, even as global markets experienced a robust bull run. Over the past six months, however, several of these headwinds have eased meaningfully.
Corporate earnings have shown strong momentum, with Nifty 500 profits rising 16% year on year in Q3 FY26, an eight-quarter high and among the strongest reporting seasons in recent years.
Sorbh Gupta, Head-Equity, Bajaj Finserv Asset Management Limited, said,” Corporate earnings momentum has strengthened meaningfully over the past few quarters. The latest reporting season reflects a broad-based recovery in profitability, which provides a more supportive foundation for equity markets going forward.”
At the same time, credit growth has returned to double digits, reflecting an improvement in demand and liquidity availability, while consumption indicators supported by GST cuts have begun to recover. The Reserve Bank of India’s cumulative 125 bps rate cuts, along with liquidity infusion, have also helped lower borrowing costs for companies and consumers.
However, new uncertainties have also emerged in 2026 that have contributed to market volatility. The rapid proliferation of artificial intelligence globally has raised concerns about potential short-term impacts on Indian IT services demand and overall job creation, which has been reflected in the recent underperformance of the IT sector.
“Technological transitions such as artificial intelligence often create periods of uncertainty for traditional service models. However, Indian IT companies have historically demonstrated the ability to adapt to such shifts, and we believe the sector will gradually reposition itself as the new technology cycle evolves,” he added.
Geopolitical tensions in the Middle East have also heightened crude oil risks for India, which imports around 85% of its crude requirement. Notably, nearly 40–50% of these imports transit through the Strait of Hormuz, making supply routes vulnerable in the event of an escalation in the region.
A prolonged conflict could lead to higher inflation, pressure on the rupee, margin pressures for sectors such as aviation, paints, chemicals and oil marketing companies, and potential FPI outflows. However, India’s strong foreign exchange reserves and strategic petroleum buffers provide an important cushion against external shocks.
“While global developments may continue to introduce bouts of volatility, India’s structural growth drivers remain firmly in place. As earnings visibility improves and domestic demand strengthens, disciplined investors are likely to benefit from staying invested through market cycles,” Sorbh explained.
