Our Bureau
Mumbai
Global investment bank Goldman Sachs has upgraded Indian equities to “Overweight,” reversing its October 2024 downgrade after India experienced its worst relative underperformance among emerging markets in two decades. The upgrade reflects not only potential catch-up after a year marked by heavy foreign outflows and earnings downgrades but also renewed macroeconomic and corporate strength. Goldman now expects the Nifty 50 index to reach 29,000 by the end of 2026, implying a roughly 14% upside from current levels.
India, which lagged behind other emerging markets by nearly 25 percentage points in 2025, is poised to re-emerge as one of the most resilient growth stories globally. This optimism is underpinned by stabilization in earnings downgrades, the fastest monetary easing cycle since the global financial crisis, and more supportive fiscal and regulatory policies.
Goldman forecasts a 14% profit growth for MSCI India in 2026, improving from 10% in the current year, supported by nominal GDP growth around 11%. With earnings stabilizing and early signs of returning foreign capital flows, India is expected to outperform regional peers over the next year.
Key policy tailwinds include a 100 basis-point cut in the Reserve Bank of India’s repo rate in 2025—the fastest easing outside the pandemic years—alongside a 1 percentage point reduction in the cash reserve ratio, liquidity infusions, and regulatory relaxations on bank credit. These measures are set to keep financial conditions accommodative through 2026-27. On the fiscal side, GST and personal income tax cuts, slower fiscal consolidation, and sustained public-sector capital expenditure are expected to reinforce a mass-consumption recovery.
The earnings cycle has bottomed out, with Q3 CY25 corporate results exceeding expectations by about 2%, driven by financials and commodities. Accelerating profit growth is projected as inflation moderates and credit expands, setting the stage for India’s next growth phase founded on strong domestic and structural drivers rather than short-term cyclical trends. Goldman Sachs’ upgrade signals renewed confidence in India’s fundamentals and market leadership within emerging equities.
