Indian stock market: Global brokerage Goldman Sachs reversed its October 2024 downgrade, as it raised its rating for the Indian stock market to “overweight” from “neutral”, citing sees strengthening earnings momentum and policy tailwinds supporting growth.
The global brokerage has set a 2026 year-end target of 29,000 for the Indian stock market’s benchmark index Nifty 50, implying a 14% upside from Friday’s close, according to a Reuters report.
The Nifty 50 index has risen about 8.5% year-to-date (YTD) but lagged other emerging markets in one of their strongest years as the earnings slowdown, foreign investor selloff and tariff concerns weighed on investor sentiment.
However, Goldman Sachs analysts believe that the “year-long earnings downgrade cycle” has bottomed out, paving the way for recovery.
Why did Goldman upgrade Indian stock market?
Goldman attributed the economic turnaround to a mix of growth-supportive measures, including interest rate cuts by the Reserve Bank of India, improved liquidity conditions, bank deregulation, reductions in goods and services tax (GST), and a slower pace of fiscal consolidation.
The brokerage also observed that September-quarter earnings have generally exceeded expectations, leading to upward revisions in select sectors.
It expects financials, consumer staples, durables, autos, defence, oil marketing companies and internet and telecom firms to lead this recovery, while remaining cautious on export-oriented IT, pharma, industrials and chemicals amid earnings headwinds and moderating public capex.
Despite foreign portfolio investors (FPIs) offloading around $30 billion since the Nifty’s 2024 peak and another $17.4 billion so far in 2025, Goldman Sachs sees indications of a turnaround. This optimism is supported by record domestic equity purchases of about $70 billion, driven by consistent retail participation and steady SIP inflows.
With India’s valuation premium over other emerging markets now significantly lower than in September 2024, Goldman noted that it has become “defensible,” even though India continues to trade at the highest valuations among peers.
Amid escalating geopolitical and trade uncertainties, the brokerage emphasised themes such as domestic self-sufficiency, a revival in mass consumption, expansion in new-economy sectors, and high-growth opportunities available at reasonable valuations as key drivers for strong market returns.
Goldman Sachs’ India upgrade follows a similar move by HSBC in late September, citing improving earnings and policy support.
(With inputs from Reuters)
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