- India's stock market may recover after a weak first half of 2026, says Abakkus
- Nifty 50 is down 7.9% and Sensex declined 9.8% despite strong corporate earnings
- Global risks like crude prices, rising yields, and AI trade volatility pose challenges
India's stock market could see a recovery after a weak first half, but a heavy pipeline of IPOs and global risks may restrict the pace of the rebound, according to Abakkus Investment Managers.
The Nifty 50 is down 7.9% so far in 2026, while the Sensex has declined 9.8%. The fall has come despite stronger corporate earnings and resilient domestic demand. In contrast, South Korea and Taiwan have gained around 50% each this year.
Abakkus, which manages about $5.2 billion in assets, expects India to outperform emerging-market and Asian peers after its weak first half. However, the investment manager believes the market's direction will continue to depend heavily on global risk sentiment.
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Crude, yields and AI trade remain key risks
Aman Chowhan, head of equities of Alternates at Abakkus AMC, said domestic conditions remain supportive, helped by strong consumer demand and better-than-expected first-quarter corporate results. However, elevated crude prices, rising global yields and volatility in the AI trade remain major external risks for Indian equities.
Foreign selling has also weighed heavily on the market. Foreign investors have pulled out a record $25 billion from Indian equities this year. Chowhan expects crude prices and the global AI trade to influence the market's direction in the near term.
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IPO pipeline could drain market liquidity
The growing supply of new shares presents another challenge.
Abakkus said IPOs, qualified institutional placements and block deals are competing for investor capital. The firm estimates that 40% to 50% of available capital could be absorbed by such offerings, leaving less liquidity for the secondary market.
India's primary market has already seen strong activity. Twenty-seven mainboard IPOs raised Rs 22,572 crore in the first half of 2026, while a packed August pipeline is expected to keep primary-market activity elevated.
The surge in offerings could therefore limit the breadth of any recovery in listed stocks as investors allocate money towards new issues and growth opportunities.
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