Math Favors India: BofA’s Amish Shah on 2026 Market Outlook

BofA India Research Head Amish Shah reiterated that the visibility of an upside is more certain for Indian markets. The brokerage has forecasted an 11% upside for Indian markets in the current calendar year as the math is turning favorable for India.

Trade Deal with the US: A Key Factor

A trade deal with the US is important as it could lead to foreign fund inflows. Historically, when the US dollar depreciates, and the US Federal Reserve reduces rates, flows turn in favor of emerging markets. In a lower interest environment, investors try to look outside for better opportunities in emerging markets, Shah said in an interview to NDTV Profit.

For more information on US dollar depreciation and its impact on emerging markets, click here.

Foreign Institutional Investment (FII)

Foreign Institutional Investment will also depend on an asset-class perspective. One could argue that higher 10-year bond yields, rupee depreciation risk, and equity-risk premium don’t translate to 115 return visibility, FII flows may be away. However, this time, the math is turning favorable for India, Shah said.

To learn more about Foreign Institutional Investment and its role in Indian markets, click here.

Earnings Growth Acceleration

BofA also expects that earnings growth may accelerate, according to Shah. This is a positive sign for Indian markets, as earnings growth is a key driver of stock prices.

For insights on earnings growth acceleration and its impact on stock prices, click here.

Market Expectations

Markets have priced in that the trade deal with the US will happen. They have also priced in that the tariff will be somewhat lower than 25%. Market participants have considered that 25% itself is very high, so somewhere between 16-25% where the tariff rate will be set, Shah said.

For updates on trade deals with the US and their impact on Indian markets, click here.

Downside Risk

Now, in case a delay happens and the expectation does not come true, markets have to reprice the fact that tariffs are actually higher. There will be a downside risk, Shah said.

For information on downside risk in the stock market and how to mitigate it, click here.

BofA’s Outlook for Indian Markets

For the last one year, BofA was not excited about Indian markets. After the NSE Nifty and the BSE Sensex scaled a fresh high in September, the global brokerage expected that markets will likely give flat returns in the November note for 2025, Shah said.

BofA projected around 10% return in this calendar year, which is where the current returns stand.

For the latest updates on Indian stock market news and trends, click here.