Highlights
- Bernstein raises December Nifty target to 26,100 from 25,000.
- Nifty Q2 earnings rise 20%; brokerage flags slowdown risks.
- Citi separately sees Nifty reaching 28,000 by December 2027.
Nifty 50 Outlook: Global brokerage Bernstein has raised its December Nifty 50 target to 26,100 from 25,000, citing supportive near-term factors, including easing crude oil prices, bond yields and capital flows. However, the brokerage has retained its neutral outlook over the next 12 months, warning of weakening economic fundamentals and limited earnings upgrades.
The revised Nifty target implies a valuation of 18.5 times estimated FY28 earnings, compared with 18 times earlier. Bernstein has maintained its near-term trading buy stance despite the recent market run-up, while remaining cautious about the sustainability of earnings growth.
Why Bernstein raised its Nifty target to 26,100
According to Bernstein, receding crude oil prices, easing yields and capital flows continue to support the near-term investment case for Indian equities.
The brokerage said an easing of the Iran conflict could help narrow India’s current account deficit (CAD) and provide support to the rupee.
However, Bernstein expects India’s current account deficit to breach 1 per cent of GDP for the first time since FY2023.
The brokerage has maintained its positive near-term stance despite the recent rally in Indian equities.
Nifty Q2 earnings grow 20%, but concerns remain
However, the brokerage attributed the strong quarterly performance partly to a low comparison base, tax cuts and a rebound in oil marketing companies (OMCs).
Bernstein expects the underlying economy to weaken through the second half of the financial year and beyond.
The brokerage also highlighted that consensus FY28 earnings-per-share (EPS) estimates are now 4 per cent below January expectations.
According to Bernstein, weaker earnings expectations and limited upward revisions could increase risks for Indian equities beyond the near term.
FII selling and LTCG tax cuts: What Bernstein says
Bernstein believes that anticipated long-term capital gains (LTCG) tax cuts could temporarily halt selling by foreign institutional investors (FIIs).
The brokerage also noted that global investors increasingly view India as a tactical investment opportunity rather than a structural, long-term investment destination.
On the artificial intelligence investment theme, Bernstein said India is neither an AI beneficiary nor an AI hedge.
Within large-cap equities, the brokerage identified financials as the only meaningful pocket of investor interest.
Citi raises Nifty target to 28,000 for December 2027
Citi also increased its target valuation multiple to 18 times from 17 times and projected earnings growth of approximately 15 per cent compounded annually between FY26 and FY28.
The brokerage said second-quarter earnings built on the positive momentum seen in the first quarter.
Citi expects crude oil prices to remain below earlier fears. According to its estimates, a $10 decline in crude oil prices could improve India’s current account deficit by 30–40 basis points and lower inflation by approximately 50 basis points.
The brokerage also estimated that lower crude oil prices could have an approximately 2 per cent positive impact on Nifty earnings per share.
On foreign investment flows, Citi said more measured AI capital expenditure could support a shift towards non-AI assets. It estimated that a 100-basis-point increase in India’s active weight in global portfolios could generate approximately $12 billion in inflows.
Citi’s December 2027 target of 28,000 and Bernstein’s December target of 26,100 reflect different forecast horizons.
Nifty outlook: Bernstein maintains near-term buy, neutral 12-month view
Bernstein has retained its near-term trading buy stance on Indian equities, supported by easing crude oil prices, yields and capital flows.
However, the brokerage continues to maintain a neutral outlook over the next 12 months.
Bernstein expects the underlying economy to weaken through the second half of the financial year and beyond, while downward earnings revisions and limited large-cap investment opportunities remain concerns.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)