Nomura sets Nifty target at 29,300 for end-2026, asks investors to stay selective as valuations cool

Share Market Outlook: Nifty, Sensex Upside Target

Nomura has struck a cautiously constructive tone on Indian equities for 2026, projecting a Nifty target of 29,300 — about a 12 percent upside from current levels — supported by calmer geopolitics, resilient macro indicators and a cyclical earnings recovery. The brokerage said India’s valuation premium has now normalised after 14 months of underperformance versus global markets, offering a more reasonable entry point for long-term investors while laying the foundation for a broader rebound in equities.

This week, benchmark indices NSE Nifty 50 and BSE Sensex hit fresh all-time highs, climbing above 26,300 and 86,100, respectively. Bank Nifty too jumped above 60,000 for the first-time ever.

The report said that domestic inflows continue to anchor the market, with equity allocations steady at 13 percent of gross financial savings in FY25, and primary issuances absorbing 78 percent of that liquidity without destabilising sentiment. Nomura does not foresee a surge in foreign flows but sees room for incremental improvement if the global AI trade cools and risk premia remain contained.

On fundamentals, Nomura expects corporate earnings to rebound to low double-digit growth in FY26, helped by a low base and strong recoveries in commodity-linked sectors such as chemicals, oil & gas, cement and metals. However, it warns that FY27 and FY28 consensus estimates may face low- to mid-single-digit cuts if the investment cycle weakens or if the trade deficit stays elevated.

• Also read | Nomura flags weakness as industrial growth hits 14-month low despite strong GDP; Trump tariffs blunt GST relief

Where should you invest now? Nomura bullish on these sectors

For investors positioning for 2026, Nomura recommends a bottom-up, selective approach -- avoiding narrative-driven, richly valued pockets while increasing exposure to underperforming exporters and exercising caution in areas with heavier government intervention. The brokerage is bullish on financials, pharmaceuticals, IT services, consumer discretionary, real estate, internet, cement, telecom and manufacturing; neutral on autos, oil & gas and metals. On the other hand, it is cautious on consumer staples, infrastructure, capital goods and healthcare services.

Nomura also flags key risks to its base case: a spike in commodity prices, a rise in global risk premia, or a sharper-than-expected global slowdown. A pronounced pick-up in domestic capex, on the other hand, remains the principal upside trigger.

Nomura’s stance aligns with the increasingly optimistic tone from global brokerages. Last month, Morgan Stanley projected the Sensex could reach 1,07,000 by December 2026 in its bull case and 95,000 in its base case, implying a potential 13 percent upside. After India’s sharp underperformance in 2025, Morgan Stanley said the market is now positioned for a revival driven by macro tailwinds, policy easing and a strengthening earnings cycle.

Recently, Goldman Sachs also upgraded India to ‘Overweight’, citing stabilising earnings, an improving macro backdrop and record domestic inflows that absorbed heavy FII selling through 2025. Goldman expects India to re-emerge as one of the most resilient emerging-market stories, forecasting the Nifty 50 at 29,000 by end-2026 -- very close to Nomura’s latest target.

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