From Valuation Pain To Opportunity: Reading The 2026 Market Setup

After one of the most challenging 12-15 months for equity investors, markets enter 2026 with a very different setup. Valuations, once the biggest concern, have corrected sharply as earnings moved up but prices failed to keep pace. India is no longer the most expensive market, while policy tailwinds - tax cuts, repo rate reductions, GST rationalization and easing global liquidity - are now in place. Lower oil prices and rate cuts by global central banks further strengthen the macro backdrop. However, persistent selling pressure, rupee volatility and heavy IPO activity have capped upside momentum. The key question now is whether markets can absorb past excesses and transition into a more stable phase. With fundraising peaking and liquidity conditions improving, 2026 could mark a shift from pain to potential.