Goldman Sachs turns bullish, lifts India to ‘Overweight’
Forecasts 14% rally for Nifty to 29,000 by 2026; Next phase of gains likely in financial, consumer durables, defence, TMT, and oil marketing sectors
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New Delhi: Global investment bank Goldman Sachs (GS) has turned bullish on India, upgrading its rating on Indian equities to ‘Overweight’ and setting a Nifty target of 29,000 by end-2026, implying a potential 14 per cent upside from current levels.
In its latest report titled ‘Leaning In as Growth Revives; Raising India back to Overweight’, the global investment bank said it expects a revival in India’s growth momentum, driven by supportive monetary and fiscal policies, an earnings rebound, and renewed foreign investor interest.
The bank’s October 2024 downgrade to ‘Neutral’, which was based on stretched valuations and a slowdown in earnings, has been reversed by the upgrade. According to the report, due to significant $30 billion outflows from foreign portfolios, Indian equities have underperformed MSCI EM by 25 percentage points over the past year, the largest difference in 20 years. Goldman Sachs said recent trends suggest a turnaround in sentiment as valuations have cooled and foreign risk appetite improves. “We now see a case for Indian equities to perform better over the coming year,” the report noted.
The investment bank said growth will be supported by the Reserve Bank of India’s easing measures, including rate cuts, improved liquidity, and bank deregulation, along with GST reductions and slower fiscal consolidation. These factors, it said, should bolster domestic demand over the next two years.
Corporate earnings for the September quarter were ‘better than expected’, leading to upgrades in select sectors. GS forecasts MSCI India profits to rise from 10 per cent in 2025 to 14 per cent in 2026, supported by a stronger nominal growth environment.
The bank believes that the next phase of market gains will be led by companies in the financial, consumer durables, defence, technology, media, and telecom (TMT), and oil marketing sectors.
It further stated that low food inflation, a robust agricultural cycle, GST rate reductions, impending state elections, and potential 8th Pay Commission wage increases are all likely to support mass consumption and raise demand and profits in consumer-related industries.
