Goldman Sachs Upgrades India to 'Overweight' with 29,000 Nifty Target: Economic Revival and Investment Opportunities Ahead

The global investment bank Goldman Sachs has signaled a significant shift in its outlook on Indian equities, elevating its rating to "Overweight" and establishing an ambitious Nifty target of 29,000 by the conclusion of 2026. This projection represents a potential 14 percent upside from current market levels.

In their latest analysis titled "Leaning In as Growth Revives; Raising India back to Overweight," Goldman Sachs expressed confidence in an imminent revival of India's economic growth momentum. The bank attributes this optimistic forecast to a combination of accommodative monetary and fiscal policies, anticipated earnings recovery, and renewed interest from foreign investors.

This upgrade effectively reverses their October 2024 downgrade, which was primarily based on concerns about stretched valuations and decelerating earnings performance.

According to Goldman Sachs' report, Indian equities have experienced substantial underperformance relative to MSCI Emerging Markets by 25 percentage points over the previous year, representing the most significant divergence in two decades. This underperformance coincided with approximately $30 billion in outflows from foreign portfolios.

The investment bank now observes emerging signs of a sentiment turnaround, noting that valuations have moderated while foreign risk appetite shows improvement. "We now see a case for Indian equities to perform better over the coming year," the report emphasized.

Goldman Sachs highlighted that growth will be bolstered by the Reserve Bank of India's monetary easing initiatives, including interest rate reductions, enhanced liquidity measures, and banking sector deregulation. Additionally, GST reductions and a more gradual fiscal consolidation approach are expected to strengthen domestic demand throughout the next two years.

Corporate performance for the September quarter exceeded expectations, prompting upgrades across select sectors. The bank forecasts MSCI India profits to increase from 10 percent in 2025 to 14 percent in 2026, supported by a more robust nominal growth environment.

Looking forward, Goldman Sachs anticipates that the next phase of market advancement will be driven by companies operating in financial services, consumer durables, defense, technology, media and telecom (TMT), and oil marketing sectors.

The report further indicated that favorable conditions including low food inflation, strong agricultural output, GST rate reductions, upcoming state elections, and potential wage increases from the 8th Pay Commission are likely to stimulate mass consumption, thereby enhancing demand and profitability across consumer-related industries.