Daijiworld Media Network - New Delhi

New Delhi, Nov 9: Global investment giant Goldman Sachs has upgraded its outlook on Indian equities to “Overweight”, signalling renewed confidence in the country’s growth trajectory. The firm has set a Nifty target of 29,000 by the end of 2026, projecting a potential 14 per cent upside from current levels.

In its latest report titled “Leaning In as Growth Revives; Raising India back to Overweight,” Goldman Sachs said it expects India’s economic momentum to strengthen, powered by supportive fiscal and monetary measures, a rebound in corporate earnings, and revived foreign investor participation.

This marks a reversal of the bank’s October 2024 downgrade, which was based on stretched valuations and an earnings slowdown.

The report highlighted that Indian equities have underperformed the MSCI Emerging Markets Index by 25 percentage points over the past year — the sharpest divergence in two decades — largely due to $30 billion in foreign portfolio outflows. However, improving valuations and a rebound in global risk appetite are now turning the tide.

“We now see a case for Indian equities to outperform over the coming year,” the report stated, reflecting growing optimism in the market’s fundamentals.

Goldman Sachs said the next phase of growth would be underpinned by the Reserve Bank of India’s easing cycle, including potential rate cuts, improved liquidity, and financial sector deregulation. Fiscal measures such as GST reductions and a slower pace of fiscal consolidation are also expected to boost domestic consumption.

Corporate results for the September quarter have outperformed expectations, prompting upgrades across several industries. The investment bank forecasts MSCI India earnings to rise by 10 per cent in 2025 and 14 per cent in 2026, supported by stronger nominal GDP growth.

According to the report, financials, consumer durables, defence, technology, media and telecom (TMT), and oil marketing companies are likely to drive the next phase of market expansion.

Goldman Sachs also pointed to low food inflation, a healthy agricultural cycle, upcoming state elections, potential 8th Pay Commission wage hikes, and lower GST rates as catalysts that could lift mass consumption and stimulate demand in consumer-centric sectors.

The bullish upgrade underscores India’s position as one of the most promising growth stories among emerging markets over the next two years.