Goldman Sachs Expects Nifty To Hit 29,000 In A Year As It Upgrades India To 'Overweight'

Global investment bank Goldman Sachs has upgraded India’s equity markets to “overweight”, setting a Nifty 50 target of 29,000 by December 2026, implying a potential upside of around 14% from Friday’s closing levels.

The upgrade comes 13 months after the brokerage downgraded its stance to “neutral” in October 2024, citing stretched valuations and a slowdown in earnings.

In its latest report titled “Leaning In as Growth Revives; Raising India Back to Overweight”, Goldman Sachs said it now expects India’s growth momentum to strengthen, underpinned by supportive monetary and fiscal policies, earnings rebound, and renewed foreign investor interest.

According to the brokerage, India has been a “significant laggard” in what has otherwise been a record year for emerging markets. Indian equities have gained only 3% in US dollar terms so far this year, compared to a 30% rally in the broader emerging market basket, marking the largest underperformance in over two decades.

Goldman Sachs attributed this weakness to high valuations, cyclical growth concerns, and profit slowdown expectations. However, it now expects Indian equities to outperform over the coming year as the earnings downgrade cycle stabilises and policy support strengthens.

“While India’s high valuation has been the most common investor concern — at 23 times forward price-to-earnings, India remains the most expensive market in EM — we expect only a moderate de-rating of 5% in our base case and 9% in our bear case over the next two years,” the brokerage said.

It noted that India’s price-to-earnings premium relative to the rest of Asia has corrected significantly from the 85–90% peak over the past two years to around 45% currently, closer to the 20-year average of 35%. “History suggests that at current levels of PE premium, India has modestly outperformed the Asian region over the next 6–12 months,” Goldman Sachs added.

Sunil Koul, Asia equity strategist at Goldman Sachs and author of the report, wrote that “as the year progressed and earnings cuts materialised, tariff headwinds soured sentiment further and led to large foreign de-risking. We now see a case for Indian equities to perform better over the coming year.”

Goldman Sachs expects easing measures from the Reserve Bank of India, targeted GST reductions, and slower fiscal consolidation to support India’s growth recovery over the next two years.

The brokerage estimates MSCI India’s earnings per share (EPS) growth to improve from 10% this year to 14% in 2026, supported by a healthier nominal growth environment.

Foreign institutional investors, who have sold over $30 billion worth of Indian equities over the past year, are now showing signs of returning. “Recent reversals suggest improving foreign risk appetite and flows as earnings recover,” Koul noted. He added that any moderation in US trade tensions could further boost sentiment.

Among key investment themes, Goldman Sachs highlighted mass-consumption revival, self-sufficiency, the new economy, and high-growth sectors. It continues to favour financials, consumer staples, durables, automobiles, defence, materials, and oil marketing companies.

Top buy-rated Indian stocks in the firm’s portfolio include PTC Industries, Hitachi Energy India, C.E. Info Systems, TBO Tek, MakeMyTrip, Suven Pharmaceuticals, Bharti Airtel, Apollo Hospitals, Uno Minda, Data Patterns, and KEI Industries.