Jefferies sees nearly 7% upside for Nifty by 2025-end, says foreign investors are underweight on India

Jefferies sees nearly 7% upside for Nifty by 2025-end, says foreign investors are underweight on India

Global brokerage Jefferies said it sees nearly 7% upside for Nifty by 2025-end, but also said that equity supply will cap upside.

Jefferies said in its India strategy report that Indian equity markets are ripe for a near-term bounce after sharp YTD underperformance.

"Equity supply will cap 12‑month upside amid expanded issuance encouraged by markets regulator," the brokerage said.

Jefferies had set a Nifty 50 target of 26,600 for the end of calendar year 2025 and the target implies nearly 7% upside from current levels.

Equities came under heavy selling pressure in the final hour on Thursday, pulling benchmark indices down by as much as 0.68%. The BSE Sensex closed at 81,160, down 556 points, while the Nifty 50 settled at 24,891, slipping 166 points.

Jefferies added that foreign investors are underweight on India due to earnings disappointments.

Jefferies said FY26 GDP growth forecast of 6.3%-6.8% by chief economic advisor and GST reforms as well as easing rates will attract capital and bolster demand.

The brokerage further said that corporate optimism on GST cut-led consumption boost has been partly priced into stocks.

So far in 2025, Nifty rose 5.5%, thus underperforming Asian and Emerging Market peers.

Meanwhile, global investment bank HSBC on September 24 upgraded Indian equities to "overweight" from "neutral", and said the shares are looking attractive on a regional basis after recent underperformance.

HSBC said it expects Sensex to hit 94,000 by end of 2026, a 15% upside from current levels and has kept 2025-end target at 85,130.

The upgrade comes eight months after it had downgraded Indian equities in January citing slowdown in growth amidst high valuations, which limited the upside potential.

HSBC said US tariffs will have little impact on the profits of most listed companies.

"In stark contrast to the crowded trades in Korea and Taiwan, India is Asia's quiet corner. Although foreign funds have withdrawn significant amounts from India in the last 12 months, a period in which the market has seriously underperformed, local investors have remained resilient. While earnings growth expectations can fall a little further, valuations are no longer a concern, government policy is becoming a positive factor for equities, and most foreign funds are lightly positioned. We think Indian equities now look attractive on a regional basis and upgrade the market to overweight (from neutral). As in China, US tariffs will have little impact on the profits of most listed companies," said HSBC in its Asia Equity Strategy note.

With inputs from Reuters