Citi Cuts Year-End Target For Nifty To 27,000 From 28,500 As War Spirals Into Energy Crisis

Global investment bank Citigroup has pared the target for India’s equity market benchmark Nifty 50 for the year-end from 28,500 points earlier to 27,000 points as war shocks hit the country’s corporates.

The brokerage has also lowered the Nifty target multiple to 19x from 20x 1-year forward price-to-earnings ratio, according to a report by Reuters.

However, the target cut from 28,500 to 27,000 still implies an upside of 17 percent from the index’s current level.

On Monday, Nifty 50 was trading at around 23,175 points with a marginal gain of close to 0.1 percent, or 21 points. The muted show on Monday comes after the market got roiled last week as the United States-Israel-Iran war intensified.

Citi Research, the equity research division of the investment bank, said that India’s fiscal and monetary response hinges on the conflict’s duration and severity. However, it warned that a prolonged crisis may hit the country and corporates hard.

It estimated that if the supply disruptions persist for three months, it could shave off 20–30 basis points off India’s growth in financial year 2026-27 and raise inflation by 50–75 basis points.

Moreover, the crisis could widen the country’s fiscal deficit by 10 basis points and raise the current account deficit by $25 billion.

“The earnings impact is a function of how prolonged the supply shutdown is,” analysts led by Surendra Goyal of Citi Research were cited as saying by the report.

Since the war, the domestic equity indices have fallen over 8 percent while the rupee has been hitting its record lows consistently.

While the hospitality industry was among the first ones to get hit by the energy crisis induced by the war, the impact has expanded to petrochemicals, fertiliser, steel and automobile as well.

The brokerage has downgraded autos to "neutral" from "overweight" on risks from crude and gas price spikes and potential semiconductor-related disruptions, dropping automaker Mahindra & Mahindra from its top picks and Mahanagar Gas from its mid-cap top picks.