Market Outlook 2026: InCred Wealth CEO Nitin Rao On Growth, Earnings and Stability

As India’s financial markets close the chapter on 2025, the year stands out not for dramatic rallies, but for resilience, consolidation, and recalibration. After early gains, markets largely moved sideways near previous highs, navigating global headwinds such as tariff-related uncertainties, geopolitical developments, and shifting international interest rate cycles.

Reflecting on the year gone by, Nitin Rao, CEO, InCred Wealth, noted that Indian markets demonstrated strength even amid external pressures.

“In a year which saw more of a paused market attempting to make sense of developments, rather than rallies, Indian markets saw early gains followed by sideways movement at levels near previous highs, with developments in tariff-related issues, geopolitics, and international interest rates. Despite outflows continuing to be an issue for foreign investors, the resilience of the market was demonstrated,” said Nitin Rao, CEO, InCred Wealth.

A defining feature of 2025 was the role played by domestic investors, whose steady participation helped offset volatility triggered by global uncertainty.

“One of the key drivers for the Indian market in 2025 has been the presence of robust domestic investor support,” Rao added.

Consolidation That Strengthened Market Foundations

Rather than being a setback, the prolonged consolidation phase helped reset valuations and investor expectations. Speculative excesses eased, and capital flows increasingly favoured companies with visible profitability and strong balance sheets.

“This phase of consolidation turned out to be helpful. Higher valuation norms settled down, with speculations curbing and the interest of investors shifting firmly to profit visibility and balance sheets,” said Nitin Rao.

While large-cap stocks provided continuity and stability, mid- and small-cap segments witnessed sharper corrections. However, as earnings downgrades moderated, signs emerged that this pressured phase was nearing completion.

“The profit forecasts of firms, which went through a phase of downward revisions, started stabilizing, thereby pointing at the approaching completion of this pressurized phase,” Rao explained.

Changing Dynamics In Fixed Income And Private Markets

Fixed income markets also underwent a notable transition in 2025. Strategies centred on long-duration investments reached maturity, prompting investors to reassess positioning.

“The strong investment trends exhibited by long duration strategies had essentially run their course, forcing a reevaluation of the investment landscape,” said Nitin Rao, CEO, InCred Wealth.

As liquidity conditions evolved, opportunities increasingly favoured income-oriented approaches, particularly in short- and medium-term strategies. Simultaneously, private markets continued their steady ascent within diversified portfolios.

“The transition of private markets from a peripheral to a more centrally invested spot within a portfolio essentially continued,” Rao noted.

Market Outlook 2026: From Caution To Cautious Optimism

Looking ahead, 2026 is expected to mark a shift in market leadership—from valuation-driven returns to earnings-led performance.

“As we enter 2026, the market story evolves from being cautious to cautiously positive. The upcoming year is likely to witness a transition from valuation-driven investment returns to earnings growth-driven investment returns,” said Nitin Rao.

A supportive regulatory environment, easing inflationary pressures, and broader earnings participation are expected to underpin this transition. However, markets are likely to move steadily rather than dramatically.

“Instead of a breakout, equities are seen showing directional improvement,” Rao added.

Large-Caps, Fixed Income And Balance At The Core

Large-cap stocks are expected to remain central to portfolios, supported by strong fundamentals and improved earnings visibility.

“Large-caps are set to continue as the core investment universe, driven by solid fundamentals and growing clarity on earnings,” said Nitin Rao, CEO, InCred Wealth.

In fixed income, stability and carry are likely to take precedence over aggressive duration bets, while selective credit strategies could offer better risk-adjusted returns. Private markets, too, are expected to play a growing role as investors seek balance across asset classes.

Progress Over Dramatics

Summing up the outlook for 2026, Rao emphasised discipline and allocation over short-term excitement.

“On balance, 2026 appears to be turning out to be a year where progress rather than dramatics will be the key to investment success; where patience, balance, and asset allocation will form the pillars on which investment decisions would rest,” concluded Nitin Rao, CEO, InCred Wealth.