Goldman Sachs Lowers Nifty Target by 14 Percent, Forecasts Further Downside for Indian Equities

Goldman Sachs Downgrades Indian Equities to 'Marketweight'

Key Highlights

• Goldman Sachs has downgraded Indian equities to 'marketweight' from 'overweight' due to deteriorating macro conditions and a looming earnings downgrade cycle.
• The brokerage has reduced its 12-month Nifty 50 target to 25,300-25,900, down from earlier projections near 29,300-29,500, a cut of roughly 14 percent.

Earnings Downgrade Cycle

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• Goldman Sachs expects corporate earnings estimates to be revised downward over the next two to three quarters, particularly in sectors linked to domestic consumption and investment.
• The brokerage has already cut its earnings growth forecasts for India to 8 percent for 2026 and 13 percent for 2027, significantly lower than earlier projections.

Central Risks

• A sustained rise in energy prices, driven by disruptions linked to tensions around the Strait of Hormuz, is worsening India's macroeconomic outlook.
• Goldman Sachs estimates that a $45 per barrel increase in crude over three months could reduce India's full-year earnings growth by about 9 percent, a sharper impact than seen in broader Asia.

Macro Outlook

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• Goldman Sachs has lowered India's 2026 GDP growth forecast to 5.9 percent, while raising its inflation outlook.

• The firm expects:

  • Foreign flows to remain a key overhang, with a combination of earnings downgrades, persistent global uncertainty, and investor concerns, including the impact of AI, delaying a meaningful return of foreign capital.
  • Weaker foreign flows, along with domestic rate hikes, to keep market valuations under pressure in the near term.

Sector Call

• Goldman Sachs advises a shift towards sectors with stable earnings and lower sensitivity to oil shocks.
• The brokerage remains overweight on:
  • Banks
  • Consumer staples
  • Telecom
  • Defence
  • Upstream energy
• The brokerage has downgraded:
  • Autos and consumer durables
  • NBFCs
  • Oil marketing companies