The Indian stock market is expected to remain on a steady growth path in 2026, supported by strong domestic fundamentals, improving company earnings and policy stability.
According to market experts at SMC, the main theme for FY26 will be an earnings recovery, driven by steady consumer spending, healthy credit growth and a gradual revival in private investment.
Below are the key sectors and stocks that could benefit the most in 2026.
Banking and financial services are likely to be the biggest growth drivers in 2026. Strong loan demand, better asset quality and stable profit margins are supporting the sector.
Large private banks and select public sector banks are well placed to gain from this cycle.
Stocks to watch:
HDFC Bank
ICICI Bank
State Bank of India
Union Bank
Kotak Mahindra Bank
Among non-banking players, Bajaj Finance continues to benefit from strong retail lending and digital reach.
Rising incomes, improving rural demand and supportive government policies are helping consumption-driven sectors.
Auto and consumer stocks are expected to benefit from better demand for passenger vehicles, SUVs and rural-focused products.
Key stocks:
Uno Minda
Tata Motors
Mahindra & Mahindra
In FMCG, large companies such as Hindustan Unilever and Britannia offer steady earnings and stability during volatile market phases.
Infrastructure, defence and capital goods remain strong long-term themes, supported by robust order books and government spending.
Stocks to watch:
BEL
JSW Infrastructure
Larsen & Toubro
The telecom sector adds long-term growth potential, with Bharti Airtel benefiting from higher data usage, improving ARPU and 5G monetisation.
The IT sector may play a supporting role in 2026. Large IT companies continue to offer comfort due to strong balance sheets and cash flows.
Key IT stocks:
TCS
Infosys
Rising infrastructure activity and renewable energy investments are supporting metal and energy companies.
Stocks to watch:
Tata Steel
JSW Steel
Hindalco
SJVN
Power Grid
NTPC
Oil India
Coal India
Overall, the market outlook for FY26 remains positive but earnings-driven. Quality large-cap stocks are expected to anchor portfolios, while select sectors may deliver higher returns.
With strong domestic fund flows, improving corporate profitability and manageable macro risks, Indian equities appear well positioned for steady and sustainable growth in 2026.
Banking: HDFC Bank, ICICI Bank, SBI, Union Bank, Kotak Mahindra Bank
Consumer & auto: Uno Minda, Tata Motors, Mahindra & Mahindra, HUL, Britannia
Telecom: Bharti Airtel
Defence & infra: BEL, JSW Infrastructure, Larsen & Toubro
IT: TCS, Infosys
Metals: Tata Steel, JSW Steel, Hindalco
Oil, energy & power: SJVN, Power Grid, NTPC, Oil India, Coal India