Goldman Sachs expects the Nifty to climb to 26,500 over the next 12 months, implying around 12% upside from current levels, as improving economic growth and corporate profitability support the Indian market. Sunil Koul, Global Emerging Market Equity Strategist at Goldman Sachs, said the target remains unchanged despite India’s recent underperformance against other emerging markets.“We do expect market to go back to highs over the next 12 months.
So, we have 26,500.” Koul said the view is supported by improving profitability, stronger high-frequency data and better quarterly earnings. Goldman Sachs expects Indian companies to deliver around 12-13% earnings growth, which Koul believes is achievable as the recovery broadens.
Foreign investor sentiment towards India has also improved. India received net equity inflows of around $2-3 billion in both July and August, after previously being used as a source of funds for the artificial intelligence led rally in other Asian and emerging markets.
However, foreign investors remain underweight on India, leaving room for further allocation if sentiment improves. Financials remain Koul’s highest-conviction sector. Strong credit growth, improving nominal growth and the better funding environment following Foreign Currency Non-Resident inflows are expected to support banks and other financial companies.
Goldman Sachs is forecasting around 14% loan growth over three to five years and about 17% growth in pre-provision operating profits. Beyond financials, Koul favours refiners, where tighter product markets could support earnings. He also likes hotels and the broader tourism theme, while defence and utility companies remain attractive medium-term opportunities.
IT services remain an underweight. Despite the recent recovery in IT stocks, Koul believes earnings are still under pressure and valuations remain relatively high. He also sees some of the recent rally as driven by short-covering rather than a meaningful improvement in fundamentals.
On consumption, Koul prefers selective opportunities in staples and tourism, with a tilt towards urban demand. He remains cautious on autos, citing the large goods and services tax base overhang. Watch the full conversation here“We still remain underweight that space,” Koul said on IT.
Overall, his India strategy remains tilted towards domestically driven sectors where he expects the improvement in growth and profitability to translate into stronger earnings. Catch all the latest updates from the stock market here