Goldman Sachs Predicts Strong India Rebound; Expects 14% Nifty Upside By 2026

Goldman Sachs expects a sharp revival in India’s economic and market growth, marking a turnaround after a year of underperformance against other emerging markets.

The firm raised India to Overweight from Market Weight, predicting that the Nifty could reach 29,000 by the end of 2026 — a 14% increase led by robust earnings growth.

In its report titled ‘Leaning In as Growth Revives; Raising India Back to Overweight’, GS said the shift was driven by supportive monetary and fiscal policies, earnings recovery, and easing foreign investor concerns.

Goldman Sachs highlighted the combined role of the RBI and the government in driving the expected rebound.

“Easing measures from the RBI, including rate cuts, improved liquidity, and bank deregulation, along with GST rate reductions and slower fiscal consolidation, should aid growth recovery over the next two years,” the report stated.

The Economic Survey had projected India’s real GDP growth at 6.3–6.8% for FY26, but GS anticipates a stronger performance supported by policy stability and private investment.

Corporate earnings in the September quarter exceeded expectations, prompting GS to raise its earnings growth forecast.

The firm expects MSCI India profits to climb from 10% in 2025 to 14% in 2026, fuelled by a healthier nominal growth environment.

Foreign portfolio investors (FPIs) had sold nearly $30 billion in Indian equities over the past year, pushing ownership levels to two-decade lows.

However, GS noted that recent inflows indicate improving global risk appetite. India’s valuation premium over other Asian markets has also normalised, creating space for further upside.

Sectors Poised for Growth

Goldman Sachs is bullish on financials, consumer goods, defence, durables, oil marketing companies, and the TMT (technology, media, and telecommunications) sectors.

It expects mass consumption recovery to gain momentum due to low food inflation, a strong agricultural cycle, GST cuts, upcoming state elections, and potential 8th Pay Commission wage hikes.

The banking sector is also expected to perform strongly, with profits projected to grow 15% in 2026, up from 8% this year, supported by credit expansion and stable asset quality.

Meanwhile, the defence sector stands out as a key beneficiary of the government’s indigenisation push, with private players expected to command higher valuations.

MSCI India lagged MSCI Emerging Markets by about 25 percentage points in 2025 — its weakest performance in two decades.

The underperformance, GS noted, stemmed from high starting valuations, earnings slowdown, and external headwinds, including US tariffs on Russian oil imports and rising visa costs.

Goldman Sachs predicts a strong comeback for India’s markets, driven by stabilising macro conditions, improving earnings, structural reforms, investor confidence, and renewed growth momentum.

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