With earnings stabilising and foreign flows showing early signs of returning, Goldman Sachs expects India to outperform regional peers over the next year
“We raise India equities to Overweight within our EM and Asian allocation and expect Nifty to reach 29,000 by end-2026, which implies 14 per cent upside, led largely by underlying 14 per cent trend earnings growth in 2026-27,” Goldman Sachs said in its latest report.
‘Defensible’
With India’s valuation premium to emerging markets (EM) now sharply lower compared to September 2024 levels, the investment advisory firm said it has become “defensible,” even if India remains the priciest among peers. The global investment advisory firm had downgraded India’s rating to Neutral in October 2024, citing its “worst relative underperformance” in two decades.
Goldman cited a combination of growth-supportive policies, including rate cuts by the Reserve Bank of India, liquidity easing, bank deregulation, goods and services tax (GST) reductions and a slower pace of fiscal consolidation as key drivers for the turnaround.
The global brokerage firm believes mass consumption revival, self sufficiency, new economy and high growth pockets are key themes, while it cites earnings shortfall, external headwinds and investor concerns over AI impact as key risks.
With earnings stabilising and foreign flows showing early signs of returning, Goldman Sachs expects India to outperform regional peers over the next year.
Sectoral picks
It remains positive on the consumer sectors like staples and autos, and upgraded durables to Overweight. It also expects financials to do well over the next year, along with consumer sectors.
“We raise defence sector to Overweight, given the high visibility on the order-book over the next few years amid increasing emphasis by the government on indigenisation and self-sufficiency,” Goldman Sachs said, adding, “Elsewhere, we remain Overweight high-growth Internet and telcos sectors and OMCs (oil marketing companies), given the healthy marketing and refining margins in a lower oil price environment.”
However, the global major lowers the consumer retail and services sector to Neutral, given the heightened competitive intensity across the major discretionary categories excluding jewellery (Paints, QSR, Fashion). It also remains cautious on export-oriented IT, pharma, industrials and chemicals.
Morgan Stanley’s views
Last week, another global major Morgan Stanley said it believes the correction in the Indian stock market is over, as the key factors driving India’s underperformance compared to its EM peers are reversing. In a bull-case scenario — to which they attach a 30 per cent probability — Morgan Stanley sees the Sensex hitting the 100,000-mark by June 2026. A base-case scenario (50 per cent probability) pegs the Sensex at 89,000-levels and in a bear-case scenario (20 per cent probability), Sensex may hit the 70,000-mark.
HSBC upgrade
In September, HSBC set a Sensex target at 94,000 levels by end-2026, while upgrading Indian stock markets to ‘Overweight’ rating from ‘Neutral’
Published on November 10, 2025
