• Market recovery outlook: Historical trends indicate the Nifty typically trades 4% to 5% higher following the end of conflicts as speculative froth exits the market. There is a high probability of the index regaining its previous peak within the current financial year.
• Corporate earnings trajectory: Nifty 50 companies crossed ₹10 lakh crore in total profit in FY26, expanding at a 10-year compounded earnings growth rate of 12.9% compared to Nifty's 9.3% price growth. Earnings are projected to maintain double-digit growth of around 10% for the current financial year.
• FII inflow dynamics: Foreign institutional flows are primarily driven by passive allocations tracking the $2 trillion MSCI Emerging Market Index rather than active stock selection. Drawdowns in markets like Korea are prompting index weight rebalancing and driving inflows back toward Indian large-cap equities.
• Sector valuation opportunities: Financial Services and IT account for 37% and 12% of the Nifty respectively, and both are currently trading two standard deviations below their historical mean valuations. Banking remains backed by strong credit growth and improved asset quality, making it central to sustained double-digit expansion.