Goldman Sachs sets 2026-end Nifty50 target—5 themes that have turned brokerage bullish

Foreign brokerage Goldman Sachs has lifted its rating for India to 'overweight' from 'neutral' with an end-of-2026 target for its equity benchmark -- Nifty50 -- at 29,000. The upgrade comes roughly a year after the brokerage downgraded its outlook to 'neutral' from 'overweight' citing slowing economic growth and corporate earnings that would dent investor sentiment.

What Goldman Sachs's Nifty 50 target means for investors

At Friday's closing level of 25,492, the target implies a potential upside of 13.8 per cent.

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Goldman Sachs has cited attractive valuations on Dalal Street behind its move.

Key takeaways from brokerage's view on India

According to Goldman Sachs, India’s monetary and fiscal policies are supporting its growth momentum, with GST rate cuts and lower interest rates seen strengthening demand in the economy over the next two years.

It also noted that foreign investor sentiment and corporate results have also shown improvement, with September quarter earnings beating estimates.

Goldman Sachs Upgrades India to 'Overweight' | Key sectors set to support market rally

The brokerage has identified five sectors that are contributing the most to the market rally on Dalal Street. These are:

• Financials
• Consumer durables
• Defence
• Technology-media-telecom (TMT)
• Oil marketing

It expects consumption to gather steam going forward, on the back of five triggers:

• Cooling inflation
• Strong agriculture cycle
• Reduction in GST rates
• Salary hikes under 8th Pay Commission
• State elections

The upgrade comes at a time when foreign institutional investors (FIIs) have pulled out approximately a net $30 billion from Indian shares over a year. However, it mentioned that the recent reversals point to an improving foreign risk appetite and flows with improving earnings.

As of November 7, FII outflows from the cash market are contained at Rs 1,632.7 crore, data shows, while domestic institutional investor (DII) inflows stand at Rs 16,677.9 crore. In October, FIIs brought in Rs 2,346.9 crore to the spot market, while DIIs net purchased shares worth Rs 52,794 crore.

The last time FIIs finished a month with net purchases was in June, with inflows at Rs 7,489 crore, according to the data. On the flipside, DIIs have been net purchasers since July 2023.

The brokerage sees limited downside or derating risk on the basis of six valuation approaches, though valuations in the Indian market remain high at a price-to-earnings (PE) multiple of 23x.

Additionally, Dalal Street's relative premium to Asian equities, it noted, has normalised to 45 per cent from a peak in the range of 85-90 per cent.