In my last month’s blog, I projected that the Nifty could deliver around 18% returns over the next one year. Since then, the index has already gained nearly 5%, prompting many investors to ask — Am I revising my 18% target upward?
The answer is a clear no.

Markets do not move in a straight line. They are inherently non-linear, and hence, one should neither get overly enthusiastic about a short-term rally nor disappointed with temporary corrections.

My call for an 18% upside is rooted in fundamentals — the Nifty50 is expected to deliver around 18% earnings growth by FY2027. Even in the absence of any price-to-earnings (P/E) expansion, earnings alone can justify that level of return. The recent rally, though led primarily by large caps, is likely to broaden over the coming months as mid and small caps join the momentum — a pattern historically observed in every bull phase.

India Inc’s Strong September Quarter — A Turning Point

The renewed bullishness in the market is backed by robust September 2025 earnings, which have come in significantly better than expected.
So far, companies representing nearly half of India Inc’s market capitalisation have reported results, showing an impressive 15% net profit growth — despite several headwinds.

To put this in perspective, the quarter saw heavy rainfall disrupting economic activity, U.S. tariff hikes hurting export competitiveness, and consumer spending delays after the Prime Minister’s August 15th announcement on GST rationalisation. Considering that consumption forms over ₹200 lakh crore of India’s ₹335 lakh crore GDP, such postponements could have dampened corporate performance. Yet, earnings resilience has defied these odds.

In fact, October GST collections were up 4% year-on-year, signalling that GST rationalisation concerns have not dented consumption. Simultaneously, RBI data shows a rise in bank credit demand during September and October — further evidence that India’s economy remains robust.

Many corporates, during their post-result conference calls, have indicated that H2 FY26 will be stronger, implying a pickup in growth momentum. Importantly, this earnings recovery is broad-based, not limited to a few sectors or companies — a hallmark of a sustainable upcycle.

After 12–15 months of muted performance due to weak earnings, corporate India’s profitability is back on track, and there’s even room for upward revisions in earnings estimates in the coming quarters.

FPI Flows Return — Liquidity Boosts Confidence

Alongside earnings, another encouraging development is the return of foreign portfolio investors (FPIs). In October alone, FPIs invested close to ₹15,000 crore in Indian equities.

Adding to this, a recent SEBI study estimates that nearly 4 crore new households are likely to start investing in equities over the next year. As of September 2025, India had around 12 crore unique investors. If this estimate materializes, the resultant liquidity surge could significantly amplify market depth and resilience.

Markets, at their core, thrive on two key drivers — earnings growth and liquidity.
If either one is missing, rallies tend to falter or get delayed.

• When liquidity drives the market without earnings support, valuations become stretched, leading to eventual corrections.
• Conversely, if earnings growth is strong but liquidity is weak, capital eventually flows back, though with a lag.

Currently, India enjoys both — a rare and powerful combination signaling the onset of a new bull market cycle.

The New Bull Market Phase

India appears to have entered a new phase of sustained bullishness, powered by improving earnings and abundant liquidity. While U.S. tariffs remain a challenge, the downside from this factor now seems limited. On the other hand, any positive policy or trade development could sharply boost sentiment.

As prices rise, investor confidence typically strengthens — a phenomenon we’re beginning to witness.
Retail investors, who had turned cautious, are likely to return aggressively. Consider this: in 2025, net retail investment stood at only ₹19,000 crore, compared to ₹1.65 lakh crore in 2024. As market confidence builds, these flows are expected to rise sharply in the coming months, further fueling the rally.

Time to Play on the Front Foot

The message is clear — it’s time to turn proactive, not defensive, on Indian equities.
With earnings visibility improving, liquidity expanding, and macro fundamentals intact, the risk–reward balance clearly favours equities over other asset classes like bullion.

I continue to hold my conviction that Indian equities will outperform gold in the next 12 months. Hence, it makes little sense to stay under-allocated. The bulls are back, and this time, they seem ready to stay.