Indian equities close FY26 with weakest showing since pandemic year

Indian equity markets ended the financial year 2025–26 on a subdued note, recording their poorest annual performance since 2020, as persistent foreign outflows and global uncertainties weighed on sentiment.

Benchmark indices reflected the strain. The Nifty 50 slipped about 5 per cent over the year, while the Sensex declined more than 7 per cent. The weakness was broad-based, though certain pockets showed resilience.

A key drag came from sustained selling by foreign institutional investors, with outflows estimated at nearly $20 billion during the year. The pressure was most visible in large-cap technology stocks, which saw sharp corrections amid slowing demand in key overseas markets and concerns around the pace of adoption of artificial intelligence-led efficiencies.

The external environment remained unsettled. Elevated crude oil prices, currency volatility and geopolitical tensions added to investor caution, limiting any meaningful recovery in equities through the year.

Even so, the market was not without bright spots. Select capital goods and metal stocks such as Bharat Electronics and Hindalco Industries delivered notable gains, supported by strong order books and domestic demand visibility.

The divergence in sectoral performance underlines a market that is increasingly selective, with investors favouring balance sheet strength and earnings visibility over broad-based risk-taking.