NO CAP: Indian stock market capitalisation has had a great year
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DHIRAJ SINGH
Last year, my annual forecast for 2025 got many things right. I had predicted US GDP growth of around 2 per cent (actual will be 1.9 per cent), India GDP growth between 5 per cent and 6 per cent (it will be 6-plus per cent), job losses due to AI (1.1 million in the US). Nationalism has gone beyond my estimation! I forecast Sensex at 85,000 and it is at 84,929. No one saw the gold price surge coming!
So, how do I see 2026?
• I think global GDP will be close to 3 per cent, led by India and China. Inflation is low across the world and that’s good news for consumers. India GDP growth will be 6-plus per cent, government spend is decreasing, and the redesigned GST will help propel consumption in a few categories. We are seeing good momentum in auto, especially two-wheelers, with the GST change.
• People quote many numbers about India’s GDP. At 5 per cent CAGR from today, we will be an $8.3 trillion market in 2040. With 6 per cent CAGR, we will be a $9.6 trillion market by 2040. So, India will be a $10 trillion economy in the 2040s. India’s GDP should overtake Japan in the next 12 to 18 months. With a 6-plus per cent GDP in India in 2026, the Sensex will accelerate. I predict the Sensex to be between 90,000 and 92,000. The stock market has done very well in India. India market cap showed 25 per cent CAGR in the last five years and 14 per cent CAGR in the last 20 years and is now 1.3 times GDP.
• The big 2026 worry globally will be youth unemployment, which currently is 13 per cent globally and between 10 per cent and 16 per cent in many economies. This is a tipping point. The victory of Zohran Mamdani as New York mayor, and the uprising in Nepal, Bangladesh and Mexico are the first signs. Affordable housing is a big concern for millennials. Will we see a new version of the Arab Spring? This is a complex societal issue, as many companies have stopped hiring freshers and are happy to poach someone with two to three years’ experience. Governments and industries need to address this.
• A pick-up in nationalism will lead to conflicts, and defence spending will go up for the country to be self-reliant. Global defence spending is about $3 trillion; expect double-digit growth. India is among the top five defence spenders, at about $84 billion, and this will grow by 10 per cent.
• AI will continue to challenge jobs. Any repetitive manual job, any job that needs summarisation will go to AI. I think AI will take away 25 per cent of jobs in the next 18 months, and we are seeing this in consulting and outsourcing. Eighty three per cent of employees globally put ‘job security’ as a key variable to work in a company. Seventy three per cent of employees worry about AI taking away their jobs. Nearly 800 million people globally use ChatGPT each week. Specialisation is already happening in AI, such as for lawyers, customer service, and so on. There is another impact of AI that will set off in 2026. Organisations have typically been pyramid structures. With AI, the organisation shape will morph into something else, maybe a diamond or a spindle!
• AI will force a change in skills. About 39 per cent of the skills today will become obsolete in 2030, according to the World Economic Forum. We will see a big business in reskilling and coaching at every level. I predict more governments getting involved in AI regulation, earlier than in the case of the internet and social media. AI is disrupting every industry, more so in media and advertising.
• America’s global role is getting redefined. In the past we discussed China plus 1 and argued that India had a chance. I see it more as China plus 5 now, as trade blocs form not around ideology or geography but a “coalition of the dependable”. So, watch for competition beyond China!
• Two billion consumers travel globally and spend $900 per person per annum — a total of $1.8 trillion. India has a rich potential in tapping this market. We get 10 million tourists a year, which is 0.5 per cent of all travellers. An Indian passport has a ‘visa on arrival’ facility in about 40 countries. We should do the same to attract more tourists to India. Travel to India will grow if we build more reciprocity in travel.
• The renewable energy battle is already lost; we will exceed the 1.5 degree Celsius Paris Agreement target. There are some bright spots though — electric vehicles, which account for 23 per cent of the total market, will grow at 15 per cent and account for all the growth in the auto sector this year. Consumers love EVs for being maintenance-free and the low consumables expenditure. In 2026, for the first time, non-coal use will be higher than coal use in the world.
• India will have its census in 2026. Re-districting has been a huge issue in America, and next year’s mid-term elections will be fought on this. India census will lead to re-districting and will need deft handling; else we will see many arguments and protests.
(Shiv Shivakumar is former chief of Nokia India and Pepsico India)
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Published on December 22, 2025
