According to a Bloomberg report, Morgan Stanley, Citigroup and Goldman Sachs have predicted a strong comeback in Indian markets next year. This year, the stock market has shown its biggest gap with emerging markets since 1993. The rupee was the worst performer in Asia.
Heavy government debt supply has put pressure on the bond market. The US-imposed tariffs hit both exporters' earnings and dollar flows, further adding to the market's vulnerability. Sentiment is improving due to long-term disruption of earnings downgrades, measures supporting growth.
Investors are also mulling an exit from the artificial intelligence trade, potentially diverting foreign flows to markets like India, experts believe.
The MSCI India index has gained 8% this year but still lags the EM benchmark. The rupee may stabilize after hitting record lows and bonds are also expected to find support. Despite setbacks in 2025, India's economy has been stronger than expected. According to official data on Friday, GDP rose 8.2% in the September quarter from a year earlier. Earnings of the top 100 companies grew by 12%, better than expected.
However, the International Monetary Fund has cut its growth forecast for the country for the next fiscal year to 6.2 percent from 6.4 percent due to the US tariffs. Challenges such as high valuation, weak exports, record trade deficit and global uncertainty persist. Foreign investors withdrew $1.7 billion in two months and experts believe that the year 2026 may see a reversal in outflows due to an improved outlook for Indian equity markets.
Stock Market: How can Gujaratis invest in American shares? Start with these 4 options and progress gradually
. Source
