Global financial services giant Nomura has revised upward its forecast for India’s benchmark Nifty 50 index, setting a target of 30,550 for March 2026. This upgrade, announced on June 10, reflects increasing optimism about India’s corporate earnings trajectory, favorable macroeconomic conditions, and continued enthusiasm from both domestic and foreign investors.
What Prompted the Upgrade?
Nomura’s latest note pins the rationale for the upward revision on India’s sustained economic recovery and robust market performance.
“India’s equity markets have shown remarkable resilience amid global turbulence, supported by strong domestic demand and improving earnings visibility,” said Sonia Gandhi, chief equity strategist at Nomura India, in the firm’s research note.
The brokerage had previously forecast a lower target for the Nifty 50, India’s major stock market index comprising 50 blue-chip companies. The new target implies an upside of nearly 12% from current levels, underscoring Nomura’s bullishness on Indian equities over the next two years.
Strong Earnings Growth Fuels Optimism
A critical driver for the revised Nifty target is the upbeat outlook on corporate earnings. Nomura expects Nifty 50 companies to post a compounded annual growth rate (CAGR) in earnings per share (EPS) of 14-16% through FY26.
“Earnings upgrades across sectors—particularly in banking, IT, and consumer durables—support a higher valuation for the index,” Nomura’s note stated.
The recent earnings season reinforced this optimism, with several Nifty 50 constituents outperforming analyst expectations. For example, major banks reported double-digit loan growth, while IT services and fast-moving consumer goods (FMCG) companies saw resilient demand.
Macroeconomic Fundamentals Remain Robust
Nomura pointed to India’s macroeconomic stability as another reason for its constructive outlook. Key indicators such as retail inflation, fiscal deficit, and GDP growth are all trending in favorable directions.
According to government data released earlier this month, India’s GDP expanded by 6.7% in FY24, outpacing most major economies. Meanwhile, retail inflation remained within the Reserve Bank of India (RBI)’s comfort zone, and recent policy continuity post-elections has reassured markets about reforms and fiscal prudence.
“The government’s commitment to infrastructure spending and fiscal consolidation enhances visibility on sustained economic growth,” said Nomura.
Strong Flows from Domestic and Foreign Investors
Another element supporting Nomura’s bullish target is the strong inflow of funds into Indian equities.
Domestic institutional investors (DIIs) deployed over ₹1.5 lakh crore in Indian shares in FY24, according to data from the National Securities Depository Limited (NSDL). Additionally, foreign portfolio investors (FPIs) have shown renewed interest amid expectations of India’s growing weight in global indices and a stable rupee.
“Robust domestic flows have lent significant support during periods of global volatility, offering a key cushion to the Indian market,” Nomura noted.
Rising Valuations: Cause for Caution?
While the outlook is positive, Nomura acknowledged stretched valuations as a potential risk. The Nifty 50 is currently trading at around 23-24 times FY25 estimated earnings—above its long-term average.
However, Nomura views this premium as justified, given India’s superior growth prospects compared to global peers. The firm also highlighted that sectoral rotation and broadening of market leadership could keep the rally intact.
Sectoral Opportunities and Risks Identified
Nomura’s report singled out several sectors that are likely to lead the next leg of growth:
Financials: Expected to benefit from credit growth recovery and asset quality improvements.
Information Technology: Cautiously optimistic as global demand stabilizes.
Consumer & Retail: Riding on rising disposable incomes and urbanization.
Meanwhile, the brokerage flagged risks such as global geopolitical tensions, higher-than-expected interest rates in the US, and a slowdown in private capital expenditure as potential headwinds to monitor.
Market Reactions and Expert Commentary
The market responded positively to Nomura’s revised target, with the Nifty 50 closing up 0.7% on Monday. Analysts across the board echoed the firm’s optimism but advised investors to remain selective.
“India is clearly on a strong structural growth path, but investors should judiciously balance growth opportunities with valuation prudence,” said Mahesh Agarwal, chief strategist at Motilal Oswal Financial Services, in a phone interview.
