Nifty's Next Stop: 28,000? Jefferies Sees Strong Upside — Factors Driving The Sentiment

India’s equity market is set to outperform peers in 2026, according to Jefferies, as improving corporate earnings and easing rupee pressures could support valuations and drive a 10% upside in the Nifty 50 at 28,300.

Mahesh Nandurkar, in the latest Jefferies note on India Equities Strategy, has stated that India is likely to outperform other emerging markets next calendar year as earnings momentum picks up. MSCI India EPS growth is forecast to rise from around 8–9% in FY26 to 13–14% in FY27, accounting for typical 2–3% EPS cuts.

Banks, autos, and power are expected to lead this improvement, with banks benefiting from near-bottom policy rates, and autos and power seeing gains from low base effects and GST cuts.

Additionally, a potential peak in global AI investment is likely to impact India less than other markets, boosting its relative attractiveness. A normalisation of India-US trade relations could also support higher foreign portfolio inflows, says the brokerage firm.

Another key highlight is that while housing demand has cooled in recent months, the broader upcycle remains intact and is expected to regain traction due to factors such as declining interest rates, mid-cycle affordability, low inventory, and limited developer leverage.

The report also notes that the 'worst for the rupee is behind,' reducing one of the key macro risks that weighed on sentiment this year. Domestic flows into equities are expected to remain robust, supported by mutual funds, insurance, pensions, and household savings of roughly $1 trillion per year.

Jefferies has set a December 2026 target of 28,300 for the Nifty 50, implying an upside of about 10% from current levels.

The brokerage firm is overweight on lenders, autos, cement, hospitality, telecom, and property, while underweight on staples, IT, industrials, and pharma. Its top stock picks include Axis Bank, Bharti Airtel, Cholamandalam, TVS Motors, Mahindra & Mahindra, Ambuja Cements, Lodha Group/GPL, Max Healthcare, JSW Energy, and GMR Infrastructure.