India’s Stock Markets Hit Record Highs as Earnings Rebound Fuels Optimism

India’s benchmark indices surged to fresh record highs on Thursday, lifted by easing valuations, signs of an earnings revival, and confidence in the country’s resilient economic fundamentals. The NSE Nifty 50 rose as much as 0.40% to a new peak of 26,310.45, while the BSE Sensex climbed 0.52% to 86,055.86—both surpassing the previous highs set in September 2024. Although profit-taking trimmed the gains by the close, sentiment remained upbeat as Asia’s third-largest economy is expected to expand nearly 7% in the July–September quarter and grow 6.8% in FY26.

Analysts attribute the rally to a solid earnings rebound, with Indian companies posting their strongest recovery in over a year. Cooling valuations after more than a year of market consolidation have created attractive entry points, pushing investors to re-enter equities. The Nifty now trades at 22.7x forward earnings, down from the elevated 23x–25x seen last year. Strengthening corporate profitability, coupled with expectations of continued earnings growth in the second half of FY26, has prompted global institutions such as J.P. Morgan to forecast the index reaching 30,000 by end-2026.

Despite foreign investor outflows of $16.9 billion in 2025, robust domestic participation has helped stabilize the market. Mutual funds have purchased equities worth 2.92 trillion rupees so far this year, providing a strong buffer against external volatility. Analysts say India’s relatively lower exposure to AI-driven market swings, coupled with its recent underperformance versus other Asian and emerging peers, may attract overseas investors back into domestic equities. A potential India–U.S. trade deal could further bolster foreign inflows, adding momentum to the markets’ record-setting trajectory.

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