India's Stock Market Poised for Earnings-Driven Growth Amidst Consolidation, Say Analysts

Ankit Mandholia from Motilal Oswal Financial Services Ltd. believes India's stock market is set for its next growth phase, moving beyond consolidation. He highlights a significant shift in the startup ecosystem, where the focus is moving from "growth-at-all-costs" to profitability, strong governance, and capital efficiency, making public market valuations a reality check. Mandholia anticipates corporate earnings to grow by approximately 10% in FY26 and 14% in FY27, suggesting the upcoming market rally will be driven by actual profit delivery rather than speculative sentiment. He notes that market valuations have normalized, with the Nifty's forward earnings multiple nearing its 10-year average, creating a good entry point for quality companies. The strength of domestic liquidity, from sources like Systematic Investment Plans (SIPs), pension funds, and insurance flows, is making the Indian market resilient and less dependent on foreign institutional investors (FIIs). Regulatory reforms by SEBI for the primary market are also enhancing investor confidence. Impact This news significantly impacts the Indian stock market by providing insights into future market direction, investor sentiment, and the criteria for successful investments. It suggests a positive outlook for stocks that demonstrate strong fundamentals, profitability, and good governance, potentially driving sector-specific and broad market rallies. Investors may re-evaluate their portfolios based on these evolving market dynamics. Rating: 8/10 Difficult Terms Explained: Offer for Sale (OFS): A process where existing shareholders of a company sell their shares to new investors, often during an Initial Public Offering (IPO). It allows early investors or promoters to exit partially or fully without the company raising fresh capital. SEBI reform policies for the primary market: Regulatory changes introduced by the Securities and Exchange Board of India (SEBI) aimed at improving the efficiency, transparency, and investor protection in the market for newly issued securities (like IPOs). This includes faster approvals, better disclosure requirements, and improved fund management processes.