** Indian Equity Outlook 2026** The Indian equity market enters 2026 poised between significant growth potential and notable liquidity risks. HDFC Securities forecasts a potential **"Goldilocks" recovery** for the year, driven by a confluence of supportive factors: * **Policy Support:** Proactive measures including policy support and liquidity infusion. * **Domestic Strength:** Sustained momentum from domestic liquidity flows. * **Global Easing:** Reduced global risk and trade uncertainty. * **Valuation Correction:** More attractive valuations following recent market consolidation. The firm projects corporate earnings growth of **16%**, forming the backbone of the positive outlook. However, this optimism is tempered by key market risks: * **Liquidity Strain:** A massive Initial Public Offering (IPO) pipeline threatens to drain secondary market liquidity. * **Foreign Flows:** Persistent weakness in Foreign Institutional Investor (FII) flows continues to be a point of caution, despite the expectation of a potential reversal.