The Indian stock market is entering 2026 with a strange situation. On one hand, there is increasing hope regarding growth, improvement in companies' earnings and support from government policies. On the other hand, a flood of new IPOs could put pressure on market liquidity and test investors' appetite. According to HDFC Securities, the coming year will depend on this balance and how the market handles it.
The biggest challenge is the long line of IPO. It is estimated that more than 190 companies are going to launch IPO in 2026, through which there is a plan to raise more than Rs 2.5 lakh crore. New listings on such a large scale raise questions. Is it possible that this rush of IPOs may harm the health of the market? HDFC Securities has warned that this will pull money from the secondary market into IPOs, which may lead to lack of liquidity and impact trading in already listed shares.
The uncertain attitude of foreign investors further increases this concern. In 2025, FIIs had withdrawn about Rs 3 lakh crore from the Indian market. Even though there is hope that foreign investment may return in 2026, but according to the report, there are still many factors which may keep them cautious. However, the atmosphere is not completely negative. The market may get support from the expectation of reduction in trade tension at the global level, reduction in geopolitical tension and softening of tariff policy. It is believed that investment trend will increase towards emerging markets, in which India can be a big beneficiary.
The situation within the country is also supportive. Steps like cutting interest rates, reducing CRR and increasing liquidity in the system are strengthening the economy. Domestic demand is strong and people are increasingly investing in the stock market, due to which dependence on foreign money can be reduced to some extent. The rapid growth of digital infrastructure and digital payments is also being considered a major strength. Due to this, India's nominal GDP growth may go into double digits in 2026 and a good recovery may also be seen in the earnings of companies.
HDFC Securities believes that valuations are now largely at the right level and the stake of foreign investors is also historically low, so if the sentiment improves then there can be a good rise in the market. According to the brokerage, Nifty's earnings may increase by around 16% in FY27 and the annual return may be around 11%. On this basis, the target of Nifty has been said to be around 28,720.
