Now, Nomura sees Nifty at 29,300 by Dec ’26, 3rd brokerage to get bullish

MUMBAI: After the two Wall Street giants, the Japanese broking leader Nomura is the latest to get bullish on the domestic market, lifting the Nifty target to a high 29,300 by December next—the highest forecast for the index so far. Goldman Sachs began the rerating of Dalal Street last month pegging the Nifty target at 29,000 by the next year-end, which was soon followed by its Wall Street peer Morgan Stanley which has set a Sensex target of 1,00,700 by the close of next year in its bull case scenario and 95,000 in its base case, implying a 13 percent upside. Both are overweight on the Dalal Street now. What’s more surprising is that Goldman was underweight on the country as late as October. After the sharp underperformance in 2025, Morgan Stanley said the Dalal Street is now positioned for a revival driven by macro tailwinds, policy easing and a strengthening earnings cycle, while Goldman also upgraded the country to ‘overweight’, citing stabilising earnings, an improving macro backdrop and record domestic inflows that absorbed heavy FII selling through 2025. The markets opened December scaling a new life-time peak but could not hold on to the rally through the course of the day. The Nifty and the Sensex hit fresh all-time highs on Monday, climbing scaling past the 26,300 and 86,100 milestones, respectively on Monday intraday but closed marginally lower from the previous day’s. The Bank Nifty also closed above the 60,000 mark for the first-time ever. However, the benchmarks so far gave only a tad over 4 percent in the first 11 months of the outgoing year and the market is trading in the red for the third day today, despite a blowout GDP growth of 8.2 percent in Q2. The sentiment is weighed down by the still missing trade deal with the US and the continuing pain on the rupee which is sniffing at 90 level against the dollar since a week now, losing 5 percent year to date. Another pain area has been the continuing selloff by foreign investors who have dumped shares worth $17 billion since April this year alone. Despite being bullish, Nomura pm Tuesday struck a cautiously constructive tone on the domestic equities for 2026 with a moderate 12 percent return and projecting the Nifty at 29,300 by December next. The report did not offer a target of the Sensex, though. The Japanese firm has cited the calmer geopolitics, resilient macro indicators and a cyclical earnings recovery coupled with the normalization of India’s valuation premium, which has traditionally been above 24x of earnings. The market has been underperforming for the past 14 months, thus offers a more reasonable entry point for long-term investors while laying the foundation for a broader rebound in equities, it said. The report said domestic inflows continue to anchor the market, with equity allocations steady at 13 percent of gross financial savings in FY25, and primary issuances absorbing 78 percent of that liquidity without destabilising sentiment. Nomura does not foresee a surge in foreign inflows but sees room for incremental improvement if the global AI trade cools and risks premia remain contained. On fundamentals, the brokerage expects corporate earnings to rebound to low double-digits growth this fiscal, helped by a low base and strong recoveries in commodity-linked sectors such as chemicals, oil & gas, cement and metals. But its weary of FY27 and FY28 saying the next two fiscals, may face low- to mid-single-digit cuts if the investment cycle weakens or if the trade deficit stays elevated. Advising investors to adopt a bottom-up, selective approach-- avoiding narrative-driven, richly-valued picks while increasing exposure to underperforming sectors and exercising caution in areas with heavier government intervention, the brokerage said it is bullish on financials, pharma, IT services, consumer discretionary, real estate, Internet, cement, telecom and manufacturing and neutral on autos, oil & gas and metals and is cautious on consumer staples, infrastructure, capital goods and healthcare services.