India’s stock market is expected to remain under pressure through the middle of next year, with analysts cutting their forecasts for the third consecutive quarter as foreign investors move money into other Asian markets.
According to Reuters, the Nifty 50 is forecast to reach 25,556 by the end of 2026, about 5% above its latest level of 24,334.55. Analysts expect it to rise further to 26,300 by mid 2027 and 27,450 by the end of 2027. These were the lowest median forecasts for the end of 2026 and mid 2027 since Reuters began conducting the polls.
Indian shares have fallen more than 7% this year, putting the market on course for its weakest annual performance in more than a decade. The decline contrasts sharply with gains in markets such as Japan, South Korea and Taiwan.
Foreign investors have sold about 2.4 trillion rupees ($25.1 billion) worth of Indian shares this year, seeking cheaper or more technology and artificial intelligence focused opportunities elsewhere in Asia. Thailand, Malaysia and the Philippines have also attracted investors looking for better value.
The outflows have contributed to a 6% decline in the Indian rupee against the U.S. dollar, while crude oil prices near $90 a barrel have added to concerns about India’s markets and economy.
The weaker market performance has come despite relatively strong economic data. India’s economy grew by nearly 8% in recent fiscal years, while Nifty 50 companies recorded 18% profit growth in the June quarter, their strongest performance in 10 quarters.
Analysts said India’s limited exposure to the artificial intelligence boom has also reduced its appeal compared with technology heavy markets elsewhere in Asia.
“Oil prices and the rupee continue to be immediate risks for Indian markets,” said TS Harihar, chief executive and founder of HRBV Client Solutions.
However, some analysts remain optimistic that improving corporate earnings could help Indian shares recover and eventually exceed previous record highs.
Domestic investors have also helped cushion the decline. Systematic investment plans contributed more than 319.61 billion rupees in July, providing a significant source of support as foreign investors reduced their exposure.
More than 70% of analysts who answered a separate Reuters poll question said a 10% or larger market correction was unlikely over the next three months, suggesting that while the outlook has weakened, most analysts do not expect a sharp near term collapse.
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