India's Long-Term Equity Prospects Intact In 2026 Despite Valuation Concerns: Mackenzie Report
The BSE Sensex was at 24 times earnings a year ago, and it's now closer to 20 times, which is much more reasonable, it says.
India remains a compelling long-term equity investment destination in 2026, even as concerns around high valuations persist, according to a new report by global investment solutions firm Mackenzie.
The assessment indicates that the country’s investment case remains intact, driven by structural strengths instead of short-term market momentum.
Mackenzie said that Indian equities, which were seen as attractive in the long term but expensive in the near term in 2025, have now seen a long period of consolidation. This adjustment has been made possible mostly by valuation factors instead of any weakening of core economic fundamentals, news agency ANI reported, citing Mackenzie’s equity investment outlook.
The report also highlighted the value appreciation in Indian equities. "The Sensex Index was at 24 times earnings a year ago, and it’s now closer to 20 times, which is much more reasonable."
Mackenzie also said that price appreciation in India had previously exceeded the underlying fundamental outlook, especially in the mid-cap segment, resulting in stretched valuations. It added that a more general change in emerging market allocations also occurred at the same time as this value reset. The shift in capital flows from India to other Asian markets, such as China, Korea and Taiwan, during this period also contributed to the correction in local equity values.
Despite this adjustment, Mackenzie said that the foundations of India's long-term equity narrative are still solid. Strong demographic trends, continued political stability and a steady rise in manufacturing exports all contribute to the nation’s long-term appeal as an investment destination.
The report outlined that India entered 2026 with equity markets that had already absorbed nearly a year of consolidation. At the same time, the broader economy remains positioned for expansion, driven by reforms. Economic growth is projected at 6.5%. This is supported by the rise of the middle class and continued momentum in manufacturing.
Despite the 2025 correction, the Mackenzie research said that valuations are still high. Additionally, it indicated that double-digit corporate earnings growth is expected, which may give stocks a big boost.
On the global front, Mackenzie said market conditions are unlikely to be much calmer in 2026. Investors have seen sharp swings in both equity and bond markets, even though volatility measures remain low. The report said that tight risk premiums and high valuations mean several risks may be getting overlooked.
Against this backdrop, the report recommended maintaining a neutral allocation between equities and bonds. It also advised investors to increase portfolio diversification across regions and consider selective exposure to commodities as uncertainty persists across global markets.
Mackenzie said that though near-term volatility and valuation risks cannot be ignored, India’s structural strengths continue to make it a compelling long-term equity opportunity.
