The Indian equity market has displayed strong resilience over the past few months, navigating a turbulent global landscape marked by escalating hostilities in the Middle East. Despite the recent overcast of the U.S.-Iran conflict and the subsequent volatility in energy markets, the domestic indices have managed to stage impressive recoveries, with the Nifty 50 recently surging past the $23,950 mark, buoyed by a temporary ceasefire.
This "Goldilocks" phase, where growth remains steady despite external pressures, has placed a spotlight on Indian Exchange-Traded Funds (ETFs) as the preferred choice for both domestic and international investors seeking diversified exposure to India's long-term growth story while managing near-term geopolitical risks.
Against this backdrop, the Reserve Bank of India’s (“RBI”) decision to hold rates provides a crucial anchor for a cautious balancing act between inflation and growth.
This sets the stage for a deeper analysis of the current state of the Indian equity market and its longer-term trajectory before turning to the Indian ETFs that warrant attention at present.
The Current State of Indian Equities
Indian equities have long been defined by traits such as a robust domestic consumption base, a young demographic profile, and a structural shift from manufacturing to services. However, the current Iran war is reshaping these dynamics.
Amid this backdrop, the RBI’s neutral stance reflects its view of a tough year ahead for the Indian economy, considering the national statistics.
While India’s GDP growth remains relatively robust, with official guidance pointing to around 6.9% real growth this year, inflation risks remain heightened, with consumer prices projected to grow near 4.6%.
The Iran war–induced surge in energy prices, along with supply chain disruptions, has pushed up headline inflation, forcing the central bank to pause rates and likely marking the end of the recent rate-cut cycle.
Episodes of rupee volatility and elevated bond yields have weighed on rate-sensitive sectors, such as real estate and consumption, while select segments, including energy and infrastructure, have benefited from higher commodity prices.
Foreign institutional investors have scaled back net inflows into Indian equities, with a sell-off of approximately $1.19 billion in March 2026 (the largest monthly outflow in recent history), prompting a reassessment of which segments of the market can reliably deliver earnings in a more uncertain macro environment.
Outlook for 2026 and Beyond
Several institutions expect Indian equities to deliver solid, even if volatile, returns over the medium term. The RBI and private sector economists project mid single digit to upper single digit nominal GDP growth over the next few years, with real GDP around 6-7% and a cautious inflation outlook that might keep the central bank on a prolonged pause for rates.
While equity strategists at major brokerages and asset managers continue to rate India as a top per-capita allocation market, key risks persist, including the prolonged Middle East conflict, a sharper global slowdown, and El Niño-driven weak monsoon conditions — all of which could compress earnings or trigger renewed foreign outflows.
Yet structural enablers, such as infrastructure spending, digitalization, and financialization of savings, may support a multi year earnings cycle, particularly in high quality, domestically oriented franchises.
Indian ETFs to Watch
Considering the aforementioned discussion, the following Indian ETFs merit attention in 2026 and beyond:
iShares MSCI India ETF INDA
This fund, with net assets worth $6.44 billion, offers exposure to 164 large- and mid-capitalization companies in India. Its top three holdings include: HDFC Bank (7.24%), Reliance Industries (6.33%) and ICICI Bank (5.37%).
The fund charges 61 basis points (bps) as fees. INDA traded at a good volume of 7.32 million shares in the last trading session.
WisdomTree India Earnings ETF EPI
This fund, with net assets worth $2.17 million, offers exposure to broad Indian equity of 568 profitable companies. Its top three holdings include: Reliance Industries (7.02%), ICICI Bank (5.15%) and HDFC Bank (5.13%).
The fund charges 84 bps as fees. EPI traded at a volume of 0.78 million shares in the last trading session.
Franklin FTSE India ETF FLIN
This fund, with net assets worth $2.49 billion, offers exposure to 273 Indian large and mid-capitalization stocks. Its top three holdings include: Reliance Industries (5.99%), HDFC Bank (5.90%) and ICICI Bank (4.43%).
The fund charges 19 bps as fees. FLIN traded at a volume of 0.28 million shares in the last trading session.
iShares India 50 ETF INDY
This fund, with net assets worth $575.9 million, offers exposure to 50 largest Indian companies. Its top three holdings include: HDFC Bank (11.18%), Reliance Industries (8.35%) and ICICI Bank (8.34%).
The fund charges 65 bps as fees. FLIN traded at a volume of 0.18 million shares in the last trading session.
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WisdomTree India Earnings ETF (EPI): ETF Research Reports
iShares MSCI India ETF (INDA): ETF Research Reports
iShares India 50 ETF (INDY): ETF Research Reports
Franklin FTSE India ETF (FLIN): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).