Multinational brokerage Citi has slashed the year-end target for India's benchmark Nifty 50 index to 27,000 from 28,500 earlier, citing downside risks to corporate earnings in fiscal 2027. The new target still indicates a 17% upside to the previous close.
Analysts led by Samiran Chakraborty and Surendra Goyal downgraded auto stocks to 'neutral' from 'overweight' rating, given risks from higher oil and gas prices as well as potential semiconductor-related disruptions. They have removed Mahindra & Mahindra Ltd. from their top blue-chip selection and Mahanagar Gas Ltd. from mid-cap picks.
Notably, the average of analysts' 12-month Nifty target compiled by Bloomberg is around 29,800, implying a return potential of 28%.
Citi's India Sector Stance
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Key Observations
On the macro level, Citi's assessment of the Middle East conflict's impact indicates 20-30 basis points downside risk to FY27 GDP growth, 50-75 bps upside risk to average inflation forecast, around 0.1 percentage points upside risk to the Centre's fiscal deficit, and $25 billion upside risk to current account deficit.
"The impact on sectors and companies derive from both higher input prices (oil) as well as limited availability (LPG, gas). Energy-intensive sectors such as fertilizers, chemicals, and transport are directly impacted by both. Sustained restriction of gas/LPG supplies across consumer discretionary (QSR, food delivery), MSME sectors (across manufacturing and services), and other sectors downstream to petrochemicals (select consumer staples) also needs to be watched out for," the Citi note said.
Moreover, the Middle East is a significant auto exports destination and select consumer discretionary companies like jewellery have presence in the region. Select capital goods and EPC players like Larsen & Toubro Ltd. and Voltas Ltd. have significant order-book exposure while Dabur India Ltd., Emami Ltd., Marico Ltd. have revenue exposure. Airlines and tourism will also see impact in international travel segment to and through the Middle East. There may be second-order impact on financials, defence manufacturing, IT services, etc., Citi said.
According to analysts, India has already underperformed emerging markets quite substantially since start of calendar year 2025, and premium to EM has moderated to average levels.
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