India Stocks: H2 Recovery Expected Amid IPOs & Global Risks

India’s stock market anticipates a recovery in the second half of 2026, according to Abakkus Investment Managers, following a weak first half where the Nifty 50 and Sensex recorded declines.

This expected rebound contrasts with H1 2026, which saw significant drops despite robust corporate earnings and strong domestic demand.

• Nifty 50 dropped 7.9% in H1 2026.
• Sensex fell 9.8% over the same period.
• South Korea and Taiwan recorded gains of approximately 50%.
• Abakkus manages around $5.2 billion in assets.

Abakkus projects India will outperform its emerging market and Asian counterparts in the coming months. However, the investment firm cautions that the pace of this market rebound remains contingent on evolving global risk sentiment.

Global Headwinds Identified

Aman Chowhan, head of equities of Alternates at Abakkus AMC, highlighted several external factors posing risks to the market’s recovery.

These include persistent commodity price pressures and a significant shift in foreign investment flows.

• Elevated crude prices remain a concern.
• Rising global yields are impacting market dynamics.
• Volatility in the AI trade contributes to uncertainty.
• Foreign investors withdrew a record $25 billion from Indian equities this year.

Domestic Liquidity Pressures

Domestically, the surge in new share issues presents a substantial challenge to market liquidity.

Abakkus estimates a significant portion of available capital could be absorbed by primary market activities, diverting funds from existing listed stocks.

• New offerings could absorb 40% to 50% of available capital.
• 27 mainboard IPOs in H1 2026 raised Rs 22,572 crore.

The continued busy August pipeline for initial public offerings is expected to maintain high primary market activity, which could restrict the breadth of recovery for existing listed stocks as investors reallocate capital.