Business
Indian Equities To Be On Firmer Footing In 2026, With Corporate Earnings Likely To Improve
New Delhi: Indian equity markets are expected to be on “firmer footing” in 2026, with domestic demand strongly supported by “macro front, lower inflation, healthy post-monsoon harvests, and the wealth effect of gold,” a report said on Tuesday.
The report from Bajaj Finserv Asset Management Limited said corporate earnings should improve on government tax measures and RBI monetary easing, pointing to a broad‑based cyclical recovery.
The asset management firm forecasted sectoral leadership to be driven by domestic cyclicals and consumption, while exports could gain momentum as tariff-related uncertainties ease and the rupee stabilises.
CY25 was marked by heightened volatility from shifting trade tariffs, geopolitical tensions, and persistent foreign institutional investor outflows, yet markets showed resilience underpinned by strong domestic fundamentals and a shift in investor dynamics, the report said.
Large‑cap stocks provided relative stability while mid‑caps returned around 5 per cent. In comparison, small‑caps fell approximately 8 per cent, reflecting a flight to quality as investors favoured balance sheet strength and earnings visibility.
Sectoral leadership rotated every two to three months after the September 2024 correction, with the auto sector (21.7 per cent) and consumption taking turns at the forefront, aided by tax cuts, duty cuts, and festive demand.
Export sectors lagged due to tariff-related uncertainties, despite rupee depreciation and tariff uncertainties weighing down on IT services, which declined 13.7 per cent.
The Nifty 50 delivered around 9 per cent in 2025, while volatility was central to sentiment as India VIX crossed the 20‑mark six times between January and May. It peaked at 22.79 in April, before averaging about 13.5 in the second half, the report noted.
Another recent report by Standard Chartered showed that reflation in the Indian economy, a possible revival in corporate earnings, and the return of foreign portfolio investors are among the positive signs that Indian equities will push higher year-on-year through 2026.
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Over recent quarters, payouts had gradually improved from roughly 65 percent to 80 percent and now to an average of about 85 percent in Q3FY26.
Infosys logo is seen.
IT major Infosys rolled out performance bonus payouts averaging around 85 percent for the quarter ended December 31, 2025 (Q3FY26), marking the strongest variable pay outcome for eligible employees in at least the past three-and-a-half years, Moneycontrol reported citing people in the know.
The bonus payout for mid- to junior-level employees ranges between 75 percent and 100 percent, with most employees clustering around the organisation-wide average of 85 percent, the report said. The development signals a steady recovery in variable compensation at the Bengaluru-headquartered IT services firm. Over recent quarters, payouts had gradually improved from roughly 65 percent to 80 percent and now to an average of about 85 percent in Q3FY26.
Employees are expected to receive their bonus letters over the next few days, with the payout scheduled to be credited along with their February salary.
One employee told the outlet that it is the strongest bonus outcome seen in recent years. The payout is also among the rare instances since the Covid-19 period when variable pay has approached the upper end of the eligible range.
Infosys last paid out 100 percent variable compensation during the pandemic. In the quarters that followed, payouts were lower amid macroeconomic uncertainty and a broader slowdown in client spending across global markets.
The higher payout comes at a time when global IT stocks have faced renewed pressure, driven by concerns over rapid advances in artificial intelligence and their potential impact on traditional IT services models.
Shares of global IT firms have seen sharp sell-offs in recent weeks amid heightened investor focus on AI leaders such as Anthropic. Investors fear that generative AI tools could compress pricing, automate routine services work and reduce demand for legacy outsourcing models.
Against that backdrop, the improved bonus payout at Infosys is being viewed as a signal of operational resilience and near-term performance strength, even as sentiment around the broader IT sector remains cautious.
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February 13, 2026, 21:44 IST
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