INDIAN STOCKS IN 2026: FIVE THINGS TO WATCH

In calendar 2025, the Indian stock market overcame fears of an unravelling and stood its own.

- BY HOWINDIALIVES.COM

But it painted a circumspect picture and moved in a narrow range, unlike its bullish leaps of the past four years. During the year, the bellwether Bombay Stock Exchange (BSE) Sensex moved within a 15% band and ended up about 8%. At these levels, it's barely about 1% below its all-time high, which it hit in September 2024. As 2026 approaches, the interplay will be between fundamental factors like corporate earnings and valuations, and the flow of funds. Here are five demand-supply questions the Indian stock market is likely to face in 2026, and which will be critical in determining where it goes from here.

WILL AI CLAMOUR STAY?

EVERY BULL market has a dominant theme that fuels share prices and anchors sentiment-be it the IT services and dotcom boom of 2000 or the commodities cycle of 2005-07.

In the current market, that role is being played by artificial intelligence (AI), with its expansive and stillevolving use cases across industries.

Meanwhile, the companies creating the AI superstructure are having a golden run on the stock market.

Valuations of companies making advanced chips, hardware, data centres, or AI engines are loaded with expectations that AI will find ample and utilitarian business use-cases.

Some of the large investment and sourcing deals across these AI companies are interlinked, and fragility in one part of the chain can have a cascading effect. As past bull markets show, when expectations fail to materialize, market corrections can be severe.