Across their outlooks, Morgan Stanley, HSBC, BofA Securities, Nomura, Jefferies and ICICI Direct argue that after one of the worst relative performances versus global peers in years, Indian markets are entering 2026 with improving macro tailwinds and light foreign positioning. Index targets clustered around the mid-90,000s for the Sensex and close to 29,000–30,000 on the Nifty suggest expectations of steady, earnings-led gains rather than a frothy rerating.
The brokerages broadly agree that falling inflation, Reserve Bank of India rate cuts, stable domestic liquidity and policy support for consumption and capital expenditure are setting the stage for a recovery. Financials, consumer discretionary and industrials dominate the opportunity set, while telecom, autos and select real-estate plays add depth. Defensives such as staples and healthcare appear more selectively, reflecting a market that is expected to reward conviction rather than caution.
What unites the six houses is a preference for stocks where expectations are manageable, balance sheets are strong and earnings visibility is improving. The result is a concentrated universe of names, spanning banks, lenders, manufacturers, consumer brands, infrastructure plays and new-age platforms, that investors are being encouraged to track closely into 2026.
Morgan Stanley: macro recovery and domestic cyclicals
Morgan Stanley strikes one of the most optimistic notes, forecasting a strong rebound for Indian equities in 2026 after what it calls their worst relative underperformance versus emerging markets in over three decades. The brokerage projects the Sensex rising to 95,000 by December 2026, driven by policy pivots supporting nominal growth, earnings compounding at a 17% CAGR through F2028, corrected relative valuations and light foreign investor positioning.
Its focus list reflects a clear preference for domestic cyclicals. In consumer discretionary, Morgan Stanley highlights Maruti Suzuki India, Trent and Titan Company as beneficiaries of an urban demand recovery supported by GST cuts. Varun Beverages features as a stock-specific overweight within consumer staples. Reliance Industries appears despite an underweight stance on the energy sector, while Bajaj Finance and ICICI Bank anchor the overweight call on financials. Capital expenditure exposure comes through Larsen and Toubro, with UltraTech Cement included despite a cautious view on materials, and Coforge representing the technology exposure.
HSBC: earnings recovery and large-cap leadership
HSBC also expects a supportive 2026 backdrop, anchored in recovering earnings, reasonable valuations and historically low foreign ownership of Indian equities. The brokerage sees consensus earnings growth accelerating from about 10% in FY26 to the mid-teens in FY27, with macro support from lower inflation, RBI easing and tax and GST reforms.
Among its preferred stocks, HSBC names Infosys as its top IT pick, State Bank of India as its favoured PSU bank, and Mahindra & Mahindra as a key beneficiary of resilience in autos and tractors. The list also includes Adani Ports & SEZ for domestic consumption leverage, Hindalco Industries as a preferred basic materials play, and Apollo Hospitals as a standout in healthcare despite an underweight sector stance. ICICI Lombard General Insurance features as the top non-life insurer, while Marico, Phoenix Mills and Kalyan Jewellers provide exposure to consumer staples, real estate and discretionary consumption themes, respectively.
BofA Securities: rate cuts, cyclicals and well-off consumption
BofA Securities takes a more measured stance, targeting the Nifty at 29,000 by end-2026 and emphasising that returns will largely track earnings growth rather than valuation expansion. The brokerage sees support from domestic institutional flows, potential foreign inflows as rate cuts materialise and reform momentum, while flagging risks from global trade uncertainty and currency weakness.
The brokerage favours rate-sensitive cyclicals, defensives with pricing power and “well-off consumption” themes.
Its buy-rated universe spans airlines, autos, consumption, utilities, financials and real estate. In autos, BofA highlights Maruti Suzuki India, Mahindra & Mahindra, Eicher Motors, Hyundai Motor India, Ashok Leyland and Escorts Kubota. Consumer exposure includes Titan Company, Eternal, United Spirits, Marico and Jubilant FoodWorks. Financials feature prominently through Bajaj Finance, Shriram Finance, Muthoot Finance, AB Capital, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Bank of Baroda, Canara Bank, Union Bank of India, AU Small Finance Bank, IDFC First Bank and Bank of India.
The list also includes IndiGo in aviation; GAIL, Indraprastha Gas and Mahanagar Gas in gas utilities; Star Health and Allied Insurance in insurance; MakeMyTrip and Leela Palaces in travel; LG Electronics India and Havells India in consumer durables; Apollo Hospitals in healthcare; Reliance Industries and Bharti Airtel in telecom; and real-estate exposure through DLF, Lodha Group, Godrej Properties, Phoenix Mills, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust and Brookfield India REIT.
Nomura: selective bets, avoid crowded trades
Nomura’s 2026 outlook is constructive but explicitly selective. Setting a Nifty target of 29,300, the brokerage warns against crowded, narrative-driven pockets where valuations leave little room for disappointment, and instead urges investors to focus on areas where expectations are lower and narratives can improve.
Its 20-stock preferred list cuts across Financials, IT services, Consumer Discretionary, Cement, Manufacturing, Internet and Real Estate. The list includes ICICI Bank and Axis Bank in banking, Bajaj Finance and Mahindra & Mahindra Financial Services in NBFCs, and Infosys and eClerx Services in IT services.
Consumer discretionary exposure comes through Titan Company, LG Electronics India and Swiggy, while UltraTech Cement represents cement and CG Power and Industrial Solutions and Dixon Technologies reflect the manufacturing theme. Nomura also highlights Dr. Reddy’s Laboratories and Alkem Laboratories in pharmaceuticals, Godrej Consumer Products in staples, Aditya Birla Real Estate in property, Sona BLW Precision Forgings in auto ancillaries, Ashok Leyland in commercial vehicles, MedPlus Health Services in organised retail and Mahindra & Mahindra as a core auto play.
Jefferies: value in laggards and sector rotation
Jefferies focuses less on index targets and more on outperforming through sector rotation and valuation discipline. Its positive stance into 2026 centres on lending financials, telecom, property, autos, cement and utilities, particularly where stocks trade below long-term averages despite strong earnings growth prospects.
Additions to its model portfolio include Godrej Properties, reflecting confidence in the residential upcycle, AU Small Finance Bank for its growth and improving asset quality, BPCL as a beneficiary of refining strength, and Axis Bank on valuation grounds. JSW Energy and Samvardhana Motherson International round out the list, highlighting Jefferies’ preference for power demand recovery and global manufacturing exposure.
ICICI Direct: technical breakout and sector rotation
ICICI Direct’s outlook is more technically driven but arrives at a similarly bullish conclusion. The brokerage expects Indian equities to resume an upward trajectory in 2026 after a volatile 2025, with sector rotation favouring BFSI, consumption, IT, autos, capital goods and metals.
Its top picks for the year include Bajaj Finserv, Indian Oil Corporation, LTIMindtree, Pidilite Industries, SRF, Can Fin Homes and Jamna Auto Industries. The common thread is a combination of technical breakouts, improving fundamentals and exposure to sectors expected to benefit from stable interest rates and a pickup in domestic demand.
Taken together, the six brokerage views distil a crowded market into 75 carefully chosen stocks that analysts believe have the earnings strength and thematic support to deliver in 2026. For investors, the message is clear: if the coming year rewards substance over hype, these are the names expected to do the heavy lifting.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)