Why Goldman Sachs cut its Nifty target - Check new target

Goldman Sachs, earlier in a report dated March 26, downgraded Indian equities, slashing its 12-month Nifty target to 25,900 from 29,300. 

This revision came as Goldman Sachs shifted its regional allocation for India to ‘marketweight’ from ‘overweight,’ citing a less attractive risk-reward scenario compared to North Asian markets.

One of the primary reasons behind the downgrade was a prolonged energy shock stemming from geopolitical tensions, which severely impacted the economic outlook.

“Our commodity analysts have raised their oil and gas price forecasts due to a longer impairment of Strait of Hormuz flows. Reflecting India’s greater vulnerability to the energy shock,” Goldman Sachs said.

According to Goldman Sachs, India's reliance on energy imports makes it vulnerable among Asian economies, as it has a low per capita income and high energy imports. 

In response to crude oil surge, Goldman Sachs economists painted a different picture of the domestic economy. They slashed India's 2026 GDP growth forecast by 1.1 percentage points down to 5.9 per cent. The revised projections also baked in higher consumer inflation, a widened current account deficit of 2 per cent of GDP, a weaker rupee, and the likelihood of the central bank raising interest rates by 50 basis points in 2026.

Goldman Sachs also lowered its earnings growth forecast for India by a cumulative 9 percentage points over the next two years. It projected earnings growth of just 8 per cent for calendar year 2026 and 13 per cent for 2027, a drop from the pre-conflict estimates of 16 per cent and 14 per cent. 

“Forthcoming earnings cuts, on top of the ongoing investor concerns over the potential adverse impact of AI, will likely impede foreign re-buying after persistent net selling (record $42bn since Sep’24 peak),” Goldman Sachs noted.

Goldman Sachs maintained an ‘overweight’ position on banks, consumer staples, telecommunications, and defence sectors.  It upgraded upstream energy companies to ‘overweight’ on the back of tight refining capacity, while simultaneously downgrading downstream oil marketing companies to ‘underweight’ “due to limited pass through of higher crude prices at the gas stations.”