After 2025's modest 9-10%, Nifty set to returns 2026 targets Nifty 28,500 – 30,000 (12-18% upside) and Sensex 1,07,000 ( Bull Case ) driven by earnings revival (14-16%) by Morgan Stanley with RBI liquidity, and domestic flows offsetting FII outflows.

India’s economy in 2026 to be continued to reflect strong underlying growth, supported by long-term structural reforms. Retail investors also displayed increasing maturity, with monthly mutual fund inflows consistently above Rs. 29,000 crore, signalling steady domestic participation.

India projected to remain the fastest-growing major economy at 6.8% in Financial Year 25–26

India’s growth improving in recent quarters, RBI raises FY26 GDP forecast (By 50bps) to 7.3% and FY27 Q1 and Q2 holding steady at 6.7% and 6.8%

Retail inflation outlook for FY26 was revised down to 2% (from 2.6% in October policy and 3.1% in the August policy)

While we would not rule out one more rate cut in 2026, monetary policy in India is likely headed for a long pause

Crude prices help offset gold import volatility & Net FDI inflow is improving

Above-normal monsoon and strong reservoir level should boost rural demand

FY26 Private Project Investments surges led by announcements in Renewable Electricity, Chemicals, Steel & ITES

Momentum is healthy in bank credit, consumer sentiment, auto sales, freight activity (likely aided by GST rate cuts and festive demand), strong steel consumption, tax collection, and services exports.

Corporate capex outlook is modestly positive and Govt capex appears to have peaked out now

A positive development of India US trade deal could only be mildly positive for growth outlook as the country still faces a stiff competition from rising dominance in Chinese exports.

While Global Growth is showing resilience, Rising Debt level is signaling fiscal strain

Key Triggers to Watch (Buy/Add)

1. Feb 1 Budget: if there are Tax cuts/capex → +5% rally.
2. RBI MPC (Apr/Jun): If the Rate cuts happens → Bank Nifty breakout.
3. Q4 FY26 Earnings (Apr): If Earnings exceeds. EPS beats → Nifty 27K.
4. US Tariff Clarity (Q2): No escalation → FII to return with ₹50K Cr

Morgan Stanley forecast Nifty 28,500 by Dec 2026 (12% upside) and set Sensex bull-case target of 107,000 by Dec 2026 (30% probability) with base case 95,000 (13% upside)

Investors should continue to invest based on their financial goals, risk appetite, and long-term asset allocation, rather than reacting to short-term market movements.

In this environment, hybrid-oriented strategies such as Balanced Advantage Funds, Multi-Asset Allocation Funds and Aggressive Hybrid Funds are better suited for lump-sum investments.

Within pure equity, we prefer large-cap-oriented funds, where valuations are relatively more comfortable.