Goldman Sachs’ Timothy Moe says India could see an earnings-led market rebound in 2026
Goldman Sachs strategist Timothy Moe said India could stage a comeback in 2026 driven by stronger earnings rather than valuation expansion. He pointed to expected MSCI India earnings growth of about 15%, while noting valuations remain expensive but defensible and foreign investor interest could revive later in the year if earnings deliver and policy stays supportive.
Why 2026 could look different for Indian equities
India may be set for an earnings-led rebound in 2026 after a weaker performance in 2025, according to Timothy Moe, Chief Asia Pacific Equity Strategist at Goldman Sachs. Speaking in an interview referenced by The Economic Times, Moe argued that the next phase of returns is more likely to be driven by earnings delivery than by further valuation gains.
He described valuations as expensive but “broadly defensible” given India’s long-term growth prospects, and suggested that investors will want proof of earnings momentum before increasing exposure. In his view, that dynamic could make the recovery “back-loaded”, with stronger sentiment potentially emerging later in the year.
Earnings growth, flows and valuation constraints
Goldman Sachs expects earnings growth of around 15% for the MSCI India index in 2026. Moe said that if that growth materialises, India could perform as a moderate outperformer among emerging markets, even if valuations cap the upside from re-rating.
The strategist also pointed to a divergence between foreign and domestic participation. While foreign investors reduced exposure after valuations rose and earnings disappointed, domestic flows—particularly via systematic investment plans—have provided resilience and helped stabilise sentiment during periods of selling.
Themes to watch: domestic demand and policy signals
Moe highlighted domestic-facing themes that could support the earnings outlook, including financials linked to a private credit-cycle recovery, autos and mass consumption, and select defensives such as staples and consumer durables. He also discussed the importance of policy support and fiscal discipline as markets interpret the Union Budget signals.
He added that catalysts for renewed foreign interest could include consistent corporate earnings delivery, progress on major trade discussions and a supportive budget that balances growth with fiscal prudence. Even with risks from global capital rotation toward AI-driven markets, the base case presented was that India’s story remains intact if earnings do the heavy lifting.