Goldman Sachs sees Nifty at 29,000 by end-2026, expects 14 pc upside on growth revival and strong earnings outlook

NEW DELHI: The Indian stock market is expected to perform better in the coming year, with Nifty likely to touch a new high of 29,000 by the end of 2026, showing an upside of 14 per cent, according to a report by Goldman Sachs.

The report noted that Indian equities have been modestly up by 3 per cent in USD terms this year, while emerging markets (EM) overall have gained around 30 per cent.

This underperformance, the largest in the past two decades, was caused by a mix of high starting valuations and expectations of slower growth and profits. These factors led Goldman Sachs to downgrade its outlook on India in October last year.

It stated, “We expect NIFTY to reach 29,000 by end-2026, implying 14 per cent upside from current levels.”

As the year progressed, earnings downgrades continued, and tariff headwinds dampened investor sentiment, leading to large foreign outflows from Indian markets. However, the report now sees a case for Indian equities to perform better in the coming year as growth and earnings recover.

It highlighted several reasons for its positive view. It said that growth-supportive policies, such as rate cuts and improved liquidity by the Reserve Bank of India (RBI), along with GST reductions and slower fiscal consolidation, are expected to aid economic recovery over the next two years.

On the earnings front, the report said that the year-long cycle of earnings per share (EPS) downgrades has lasted longer than usual but has now stabilised over the past three months. The third-quarter 2025 results are performing better than expected, leading to upgrades in some sectors.

Goldman Sachs expects MSCI India profits to rise from 10 per cent this year to 14 per cent next year, supported by an improving growth environment.
The report also pointed out that foreign investors have sold around USD 30 billion over the past year, the second-largest outflow historically. This has pushed foreign ownership and mutual fund allocations to near two-decade lows.

However, recent inflows indicate improving foreign investor sentiment, supported by a potential easing in US trade tensions, which could further lift market confidence.

It said that while valuations remain high at 23 times price-to-earnings (PE), the risk of a sharp de-rating is limited. It added that India’s relative premium to other Asian markets has normalized, which could lead to moderate outperformance.

The report concluded that it has raised India’s rating to “Overweight,” favoring consumer, financial, and domestic-focused sectors. It expects Nifty to reach 29,000 by the end of 2026, implying a 14 per cent upside from current levels. (ANI)