Global Investment Banking firm Citi has raised its Nifty 50 target to 28,000 from 26,000 earlier, in its latest note on Monday, November 9. The target raises comes the same day as HSBC upgraded Indian equities back to “overweight”, seven months after its first downgrade.
The revised target from Citi implies an upside potential of 12% from current levels. The Nifty 50 gained 7.5% in the week gone by, marking its best weekly performance in nearly six years.
Citi has highlighted four major reasons behind its latest move:
First, the second quarter results build on the positive momentum generated in the first quarter despite the elevated commodity prices. Citi expects India’s earnings to compound at a CAGR of 15% to 16% over financial year 2026-2028, which is in-line with the consensus forecasts.
Second, lower oil prices could help India’s macro and earnings assumptions, Citi wrote in its note. A $10 drop in oil prices would help India’s current account deficit (CAD) by 30 to 40 basis points, and aid cooling inflation down by 50 basis points. That, according to Citi, could translate into a 2% upgrade for the Nifty 50’s Earnings Per Share, Citi wrote in its note.
Third, after the US midterm elections, the risks of increased pace of data center moratoriums has aided rotation into other assets in the last one week, and that trend could continue to benefit into India, Citi said.
“If AI capex growth materially slows, it could have an impact on token availability / prices, and therefore on the pace of AI diffusion,” Citi wrote in its note, adding that Indian companies are relatively better placed as focus on AI monetization and outcomes will increase.
Lastly, there are $1.5 trillion worth of assets benchmarked to MSCI EM, and assuming a near-20% increase in active weight, could result in inflows of nearly $12 billion, Citi’s note said. India’s weightage in MSCI EM as well as India’s “underweight” in EM portfolios are both close to multi-year lows, while domestic flows continue to remain resilient.
What Are The Key Risks For Indian Markets as per Citi?
The situation in West Asia continues to remain volatile and any spike in oil prices would be a near-term risk.
A potential consumption slowdown going forward given the anniversarisation of the GST benefits, as well as the El Nino impact, could also be a risk, as per Citi, along with the AI impact on jobs being worse than expectations.
What Are Citi’s Top Picks In India?
Citi has added Bajaj Finance to its list of top picks, citing growth visibility and a diversified product bouquet and healthy provisioning buffer which will support earnings resilience and superior return ratios.
It also said that staples may see near-term benefits if lower oil prices sustain but competitive intensity in the sector remains high. Citi also expects some industrial stocks to see near-term pressure from the data center theme, with their preferred plays having other drivers like power capex, manufacturing and infrastructure spending, which will ensure continued earnings momentum.
Citi raises Nifty 50 target to 28,000, explains four major factors behind its bullish call