By Bharath Rajeswaran
Dec 10 (Reuters) – Citi Research expects India’s benchmark Nifty 50 to rise to 28,500 by end-2026, up 10.3% from last close, citing an improving consumption backdrop, sustained rural demand and early signs of an urban recovery.
Citi’s market outlook mirrors similar calls from HSBC, J.P.Morgan and Nomura in the last few weeks.
The Nifty has gained 9.3% in 2025 so far, underperforming its emerging market and Asian peers.
Both the Nifty and the 30-stock BSE Sensex hit record highs in November after 14 months, but have failed to sustain the rally since.
A Reuters poll of economists expects the Nifty to hit 28,500 by the end of 2026 and 28,850 by mid-2027.
Analysts Surendra Goyal and Vijit Jain said the key headwinds that hurt Indian markets in 2025—subdued earnings, relatively higher tariffs than most emerging peers, and a lack of artificial intelligence themes—are now reversing.
They added that “goldilocks” conditions of resilient growth and benign inflation would converge to support equities in 2026.
“Conviction in low double‑digit earnings growth is building, which should support the market, while a favourable U.S.-India trade deal in the coming weeks or months could help reverse its underperformance,” they wrote.
Earnings had already gained momentum in the September quarter, aided by supportive fiscal and monetary policies.
The brokerage forecasts Nifty earnings per share growth of 13–14% year-on-year in fiscal 2027, nearly twice the 7% expected in fiscal 2026.
Additionally, it expects gross domestic product growth to hold near 7.1% in fiscal 2027 versus 7.5% the previous year, with stronger discretionary demand, faster corporate and retail credit growth, and stable asset quality driving a corporate earnings recovery.
Citi also projects a $20 billion balance of payments surplus in fiscal 2027 on an improving current account and returning capital flows, and expects the rupee at 91 per U.S.
dollar.
The brokerage remains overweight on banks, telecom, autos, healthcare and defence, and underweight on IT and consumer staples.
It has removed Kotak Mahindra Bank and GAIL from its top large-cap picks, added Mahindra & Mahindra, and brought Aavas Financiers into its preferred mid-cap basket.
Its contrarian ideas include ICICI Prudential Life, Jubilant FoodWorks, HPCL, Lupin and Voltas.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman)
