Goldman Sachs upgrades Indian equities to 'Overweight', sees Nifty at 29,000 next year
Goldman Sachs has upgraded India to 'overweight', raising its Nifty 50 target to 29,000 for December 2026. Despite high valuations, the brokerage sees limited downside risks as relative premiums have normalised.
- Nov 10, 2025,
- Updated Nov 10, 2025 9:08 AM IST
Goldman Sachs has upgraded its view on Indian equities to 'overweight', just over a year after previously rating the market as neutral. The brokerage has set a new target for the Nifty 50 index at 29,000 by the end of December 2026, indicating expectations of a 14% upside from current levels. Despite Indian market valuations remaining elevated at 23 times price-to-earnings, the firm stated, "Goldman Sachs sees limited downside or de-rating risk based on six different valuation approaches."
The relative valuation premium to Asia has also moderated to 45% from a previous peak of as much as 90%.
India's equity market has risen by 3% in US Dollar terms this year, but this performance has lagged Emerging Markets, which have returned up to 30% over the same period.
As noted by Goldman Sachs, "Goldman Sachs attributed the underperformance to a mix of high valuations, cyclical growth and profit slowdown expectations."
The brokerage described the gap as the largest underperformance in two decades. Foreign investors withdrew over $30 billion from Indian equities during the past year, reducing foreign ownership and mutual fund allocations to the lowest levels in almost twenty years. In its report, Goldman Sachs added, "The underperformance, according to Goldman Sachs, was also the largest in the last two decades."
Earnings trends are showing signs of stabilisation, with the brokerage noting that India's Earnings Per Share (EPS) downgrade cycle has lasted longer than the typical median cycle of 10 months and has stabilised over the last three months.
Goldman Sachs stated that the results for the quarter so far have been better compared to low expectations, leading to upgrades in select markets.
The firm expects profits for MSCI India to recover from 10% this year to 14% next year, supported by a more favourable nominal growth environment.
Sunil Koul, author of the Goldman note, wrote, "As the year progressed and earnings cuts materialised, tariff headwinds soured sentiment further and led to large foreign de-risking. We now see a case for Indian equities to perform better over the coming year."
Koul that recent reversals suggest improving foreign risk appetite and flows as earnings recover, and suggested that a moderation in US trade tensions could further support market sentiment.
Goldman Sachs has upgraded its view on Indian equities to 'overweight', just over a year after previously rating the market as neutral. The brokerage has set a new target for the Nifty 50 index at 29,000 by the end of December 2026, indicating expectations of a 14% upside from current levels. Despite Indian market valuations remaining elevated at 23 times price-to-earnings, the firm stated, "Goldman Sachs sees limited downside or de-rating risk based on six different valuation approaches."
The relative valuation premium to Asia has also moderated to 45% from a previous peak of as much as 90%.
India's equity market has risen by 3% in US Dollar terms this year, but this performance has lagged Emerging Markets, which have returned up to 30% over the same period.
As noted by Goldman Sachs, "Goldman Sachs attributed the underperformance to a mix of high valuations, cyclical growth and profit slowdown expectations."
The brokerage described the gap as the largest underperformance in two decades. Foreign investors withdrew over $30 billion from Indian equities during the past year, reducing foreign ownership and mutual fund allocations to the lowest levels in almost twenty years. In its report, Goldman Sachs added, "The underperformance, according to Goldman Sachs, was also the largest in the last two decades."
Earnings trends are showing signs of stabilisation, with the brokerage noting that India's Earnings Per Share (EPS) downgrade cycle has lasted longer than the typical median cycle of 10 months and has stabilised over the last three months.
Goldman Sachs stated that the results for the quarter so far have been better compared to low expectations, leading to upgrades in select markets.
The firm expects profits for MSCI India to recover from 10% this year to 14% next year, supported by a more favourable nominal growth environment.
Sunil Koul, author of the Goldman note, wrote, "As the year progressed and earnings cuts materialised, tariff headwinds soured sentiment further and led to large foreign de-risking. We now see a case for Indian equities to perform better over the coming year."
Koul that recent reversals suggest improving foreign risk appetite and flows as earnings recover, and suggested that a moderation in US trade tensions could further support market sentiment.