Global investment bank Goldman Sachs has changed its view on India’s equity market and has now made it overweight. This means that this bank is now expressing more confidence in the Indian stock market than before. In October 2024, Goldman Sachs had given India a neutral rating, but now it has acknowledged that India is again returning to a strong economic and corporate position. The bank says that despite heavy selling by foreign investors last year and weak results, now the position of India’s economy and companies is getting stronger again.
According to the report, India can become the fastest and stable growing economy among emerging markets in the next few years. Goldman Sachs has estimated that the Nifty 50 index could reach the level of 29,000 by the end of 2026. According to this, India’s comeback rests on four important bases – policy support, earnings revival, improved foreign positioning, and defensible valuations.
The report said that India performed about 25 percent less than other emerging markets this year, but now the situation is changing due to improvements in infrastructure and policies. The bank estimates that MSCI India’s profits will increase by 14 percent by 2026, while this year it is 10 percent. Also, the country’s nominal GDP is expected to increase by about 11 percent.
Foreigners withdrew 30 billion dollars, domestic investors put in 70 billion.
Foreign investors sold shares worth about $30 billion in 2025, making the Indian market somewhat under-owned. But during this period, domestic institutional investors invested more than $70 billion and kept the market stable. Goldman Sachs believes that India has now again become one of the most attractive markets in Asia.
The Reserve Bank of India (RBI) has also played a big role in this process. In 2025, the repo rate was reduced by 100 basis points, which made loans cheaper and boosted economic activities. Apart from this, the Cash Reserve Ratio (CRR) was also reduced by 1 percent, due to which more cash was available with the banks.
On the fiscal front, the government has tried to revive consumption through GST and income tax relief, public investment and slow fiscal tightening. With its effect, the spending capacity of the general public will increase, which will bring new life to the economy.
Which sectors are your favourites?
Q3 CY25 (July-September) corporate results were better than expectations by about 2 per cent, especially in the banking and commodity sectors. This is an indication that the earnings of companies have started improving and there will be further increase in it in the coming months.
Goldman Sachs has described certain sectors as “favorites” for investors. These include banking and financial services, where loan growth is likely to increase; auto, consumer goods and durables, where sales may pick up due to tax incentives and rural demand; The defense sector, which is being strengthened by the government’s Atmanirbhar Bharat scheme; And oil marketing companies and telecom sector, whose earnings have remained stable.
The bank has also described new-economy sectors such as digital platforms, electric mobility, and defense technology as attractive for future investment. Government policies and private investment are working together in these areas.
However, the report also warned that India’s momentum could be slightly affected if earnings recovery is slower than expected, there are global shocks or there is an AI-related boom in Asian markets. Nevertheless, Goldman Sachs believes that India’s fundamentals are strong, and it will outperform among emerging markets over the coming two years.
