Indias stock market may be positioned for a stronger run, according to Goldman Sachs, which has upgraded the country to Overweight in its emerging-market and Asia portfolios. The brokerage now expects the Nifty 50 to reach 29,000 by December 2026, signalling roughly 14% upside. The call follows a year of market underperformance but reflects improving earnings, supportive policy moves, and early signs of returning foreign capital.
Goldman says earnings momentum is stabilising after a long downgrade cycle. MSCI Indias earnings per share growth is projected to lift from about 10% in 2025 to 14% in 2026, helped by stronger nominal growth and better domestic demand. Corporate results have started to surprise on the upside, prompting selective upgrades across sectors.
Key growth drivers
Six areas are expected to lead the next phase of the market: financials, autos, consumer staples, consumer durables, defence, and internet/telecom. Financials remain the top overweight. A 100-basis-point cut in policy rates, liquidity measures, and CRR relaxation have supported lending, helping keep credit growth near 14% year-on-year with stable asset quality. Private banks are seen driving profits, though public-sector lenders should also deliver steady growth.
Autos are benefiting from cheaper loans, recovering rural incomes, stronger festive sales, and lower input costs. Consumer staples have gained from easing food inflation and improving rural demand, with profits likely to grow in double digits through FY2627. Goldman has also upgraded consumer durables, citing stronger urban discretionary spending, easier credit, and production-linked incentives.
Shifts in sector outlook
Defence remains a long-term opportunity supported by indigenisation and large order books, with private companies positioned for 20%+ earnings growth. Internet and telecom players are seeing better operating leverage and rising data use.
The brokerage is cautious on exporters such as IT services and large-cap pharma due to soft global demand, visa-related cost pressures, and weak capex. It flags risks including prolonged foreign outflows, slowing global growth, and inflation limiting further rate cuts. Still, with valuations normalising and foreign holdings at multi-year lows, Goldman expects sentiment to gradually improve.
