Nifty likely to hit 29,000 in 2026 as earnings drive market gains
New Delhi: India appears poised for a solid, earnings‑driven market, with the Nifty likely to climb to 29,000—an 11.4 % upside—according to a report released Thursday.
Bank of America’s latest data suggests large‑cap companies will beat their smaller counterparts, though pockets of opportunity are emerging among small‑ and mid‑cap names in sectors such as financials, information technology, chemicals, jewellery, consumer durables and hotels.
The report notes that upside risks dominate, driven by a packed events calendar, expected policy continuity, and the possibility of foreign institutional outflows turning around.
On the downside, the analysis cautions that small and mid‑caps could feel the shock more sharply due to their steeper valuations and greater sensitivity to risk sentiment.
Bank of America sees limited room for valuation expansion, as the Nifty currently trades around 21‑times forward earnings—about one standard deviation above long‑term averages. Such high multiples typically survive only during periods of strong earnings upgrades.
Looking ahead, the brokerage projects earnings growth to accelerate through fiscal 2027, buoyed by stronger loan growth in the financial sector, improved discretionary spending from anticipated GST cuts, higher telecom tariffs, solid performance in non‑ferrous metals, and a strong base in IT and staples.
The report remains overweight on rate‑sensitive sectors—including financials, real estate, passenger and commercial vehicles, and regulated power utilities—expecting affluent spending to outpace mass consumption, thanks to tighter balance sheets and more resilient purchasing power.
However, the firm warns that capital expenditure growth for both central and state governments will likely slow significantly, constrained by limited fiscal headroom.
As a result, the brokerage keeps an underweight stance on Industrials and Cement, while favoring select capex‑linked companies with clear growth potential.
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