Overweight on Indian equities, Nifty to hit 29k: Goldman Sachs

NEW DELHI: Goldman Sachs on Monday raised Indian equities to “overweight” and set a target of Nifty hitting 29,000 by 2026-end, driven by improving financial conditions and growth supportive policies by the govt and RBI.

“With a year-long earnings downgrade cycle stabilising in the past few months and showing signs of recovery, coupled with our expectations of policy-driven easing financial conditions going forward, we now see a case for Indian equities to perform better over the coming year and moderate its significant underperformance versus the region,” Goldman Sachs said in a report.

The report said year-long earnings downgrade cycle, which was a primary reason for lowering the Indian equity market view last year, has bottomed out and will see recovery heading into next year. Goldman Sachs also said that a series of regulatory easing measures announced this year should aid growth recovery over next two years.

It cited the RBI rate cuts of 100 basis points in 2025 had improved liquidity conditions and given typical transmission lags and expectations that these measures will ease financials.

The report said that on the fiscal front, the government’s targeted consolidation over the next two years is less pronounced than in the past few years, suggesting peak fiscal drag was largely over.

“This along with personal income tax cuts and the recent GST rate cuts, should boost mass consumption recovery, that was already underway before the GST simplification.

“On the investment front, while elevated trade uncertainty has dampened corporate capex ordering activity this year, we expect US-India tariffs to ultimately settle at lower levels, which should foster a recovery,” said the report. It said that foreigners have net sold $30 billion over the past year, second largest historically, pushing foreign ownership and mutual fund allocations near two-decade lows.

The report said recent reversals suggest improving foreign risk appetite and flows as earnings recover. Potential moderation in US trade tensions could act as an additional market catalyst.