On 10 November 2025, Goldman Sachs upgraded its outlook on Indian equities from “Neutral” to “Overweight”.
Alongside the upgrade, the firm set a target for the Nifty 50 index of 29,000 by end-2026, implying an upside of about 14 % from current levels.
Why the Upgrade Matters
Earnings Recovery
Goldman Sachs argues that the long earnings-downgrade cycle in India’s corporate sector appears to have bottomed out, providing a foundation for better profit growth ahead.
They estimate MSCI India’s profit growth to rise from ~10 % in 2025 to ~14 % in 2026.
Policy Support & Domestic Demand
The upgrade is rooted in multiple supportive policy moves:
- Reserve Bank of India easing (rate cuts, liquidity support)
- GST reductions and slower pace of fiscal consolidation
- Revival of domestic consumption and structural demand themes.
Valuation & Investor Flows
India had lagged other emerging markets significantly in 2025—foreign investors pulled around US $30 billion from Indian equities according to Goldman.
However, domestic institutional and retail flows have remained strong (~US $70 billion inflows), suggesting investor interest is broadening.
Goldman also notes that India’s valuation premium over Asia has compressed—making the “expensive” tag less problematic.
Key Sectors of Opportunity
Goldman Sachs lists these as the sectors expected to lead the upturn:
- Financials – as credit conditions ease and banks/demand rebound.
- Consumer sectors (staples, durables, autos) – driven by rural revival, tax cuts and consumption uptick.
- Defence and oil marketing – benefiting from government support and structural themes.
- Internet/telecom (new economy themes) – as digitalisation expands.
Goldman remains cautious on sectors such as exports (IT services, pharma, chemicals) where earnings visibility is weaker. Moneycontrol
Risks & Caveats
- India still trades at ~23 × forward earnings—relatively high compared to many emerging markets. mint+1
- External shocks (global slowdown, geopolitical risk) or earnings disappointments could derail momentum. Moneycontrol
- Foreign investor hesitance remains a factor – past outflows were substantial. If flows do not resume, market upside may be muted.
Implications for Investors & India’s Market
- The upgrade signals renewed confidence in India’s equity market and may attract more global allocation.
- Domestic investors may see this as validation to increase exposure to India-focused equities or funds.
- Policymakers and corporates may interpret this as encouragement to sustain structural reforms and support growth themes.
- For global investors, India may shift from “under-weight” or neutral to a preferred market within emerging economies.
Context & Background
Goldman Sachs had downgraded India in October 2024 amid stretched valuations and slower earnings growth.
Since then, India’s markets under-performed emerging markets—yet structural reforms and policy support were strengthened in the meantime.
Conclusion
The Goldman Sachs upgrade India to “Overweight” verdict is a significant milestone. It reflects belief that India’s macro-economics, earnings trajectory and policy framework are aligning for growth. While risks remain, this turning point could mark a shift in how India is viewed in global equity portfolios.
