Axis AMC Predicts Indian Stock Market May See Recovery Due to Strong Economic Growth

According to a senior fund manager at Axis Asset Management Company, the Indian stock market may witness a recovery during the remainder of the financial year following a prolonged period of weak performance. Strong corporate earnings and steady economic growth will serve as the primary basis for this correction.

According to a Business Standard report, following 10 consecutive years of gains, the Nifty 50 has seen a decline of approximately 12% so far in the year 2026. Factors responsible for this decline include rising oil prices due to the US-Israel war on Iran and a record-breaking foreign institutional outflow of $31.3 billion. Investors have shown greater interest towards markets driven by the AI boom.

Axis AMC, which manages assets worth ₹3.66 trillion ($38.5 billion), believes that while the market is facing uncertainties such as high crude prices, geopolitical tensions, and global monetary tightening, India's sustained growth of over 7% can create a promising scenario, according to senior equity fund manager Sachin Relekar.

Cautioning about the foreign fund outflow, Relekar stated that this reflects factors such as crude prices, currency movements, and global bond yields rather than concerns regarding India's growth prospects. He added that the long-term financialization of domestic savings is evident, although significant funds still remain in fixed deposits.

Their investment approach is focused on stock selection, with preferred themes including AI-driven capital expenditure, energy, electrification, domestic manufacturing, and consumer internet. They also favor private sector banks and non-banking financial companies due to attractive valuations and a stable earnings outlook. He also expressed expectations that the manufacturing sector will continue to receive support due to government policies.

Relekar noted that in some cases corporate earnings have increased, but prices have not increased proportionately due to global factors. Therefore, the risk-reward ratio is much better than a year ago, which will aid in the recovery. However, he advised caution against weak businesses facing technological disruption and companies confronting fierce competition from e-commerce platforms.