After a year marked by foreign fund outflows, currency pressure and uneven sectoral performance, market participants are beginning to spot early signals of a turnaround. A growing view on Dalal Street is that the worst may already be behind, with improving sectoral trends, easing selling pressure from foreign investors and domestic policy support laying the groundwork for a stronger 2026.

That optimism was echoed by market expert**,** Sunil Subramaniam, who broadly agreed with the assessment that the coming quarters could mark a meaningful shift in market momentum.

“I do broadly agree with Sudip ji here and I do hold the same optimism and I would like to expand on what he said with two-three points. So, first is, the turnaround is already there.”

Subramaniam pointed to a striking reversal in sectoral performance. The weakest performers of the year — IT, realty and consumer durables — have begun to recover meaningfully in recent months.

“Now if you look at the fact that the worst performing sectors for the year were IT, realty, and consumer durable. Now if you take the same three sectors for the last three months, it has given double-digit returns, realty has turned positive, and consumer durables is about 1% negative.”

According to him, this shift has been underway since the October–December quarter, indicating that markets may already be in the early stages of a rotation rather than waiting for a distant trigger.

Another stabilising force, he said, has been the sheer scale of domestic institutional investor participation, which has helped cushion the impact of foreign selling.

“DIIs bought about 8 lakh crores last year. FIIs sold only about net-net I think one-and-a-half lakh crores if you take off net of the primary market investments they made.”

The heavy selling by foreign investors, Subramaniam explained, pushed domestic investors towards large-cap names, particularly in banking and financial services, creating a sharp return divergence between large caps and the broader market.

“The fact that the FIIs have been selling has made them buy larger cap stocks and that is why you have seen the return differential between large and small.”

However, he believes this dynamic could reverse if foreign selling merely slows, even without aggressive buying.

“If FII selling comes down itself, you will find that DIIs will now go chasing growth.”

Earnings visibility, he argued, is also improving materially as multiple fiscal and monetary measures begin to play out together.

“All the efforts taken both on the fiscal and monetary policy, the income tax cuts, GST cuts, RBI rate cuts, liquidity infusion, CRR cuts, bank reforms, all of these will have a full year to play out and I do expect definitely that from an earnings perspective you will have a much better 2026.”