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Informist, Friday, Mar. 27, 2026

 

MUMBAI – Goldman Sachs has downgraded Indian equities to 'market weight' from 'overweight' earlier, and trimmed its 12-month target for the Nifty 50 to 25900 points from the previous target of 29300 points. The earnings forecast for 2026 has been lowered to 8% from 16?rlier, and that for 2027 has been cut to 13% from 14%. Slower growth, and depreciation of the Indian rupee as a result of high crude oil prices will weigh on the Indian equity market, Goldman Sachs said in a research report.

 

Goldman Sachs said that the risk-reward ratio for the Indian market is lesser compared to North Asian markets amid the ongoing hostilities in West Asia. Indian equities are more exposed to oil price shocks than others in the region, Goldman Sachs said, and added that risks for the market are tilted towards the negative for the next three to six months. The consensus estimate for earnings growth in India is at 16% for both 2026 and 2027.

 

Investor sentiment for India is likely to be soft in the near term as the country remains vulnerable to tensions in West Asia. Goldman also cut its MSCI India 'fair-value' to 20.5 times forward price-to-earnings from 21.8 times earlier. "...valuation normalisation will likely occur as earnings downgrades come through," the investment bank said.

 

Investors' concerns around the impact of artificial intelligence have also not completely abated, and that may hinder foreign buyers from putting money into Indian equities, the report said.

 

It could take two or three quarters more for earnings growth to stabilise. After this stabilisation takes place, "earnings growth could drive equities higher." Companies with stable earnings and strong balance sheets are preferred in the current scenario, the Goldman report read. If the Strait of Hormuz opens up sooner than anticipated, then the path of stabilisation will likely be easier for the Indian equities, it said.

 

Goldman Sachs is overweight on banks, consumer staples, telecommunication, defence and upstream energy companies in India. It upgraded upstream energy companies to ‘overweight' on tight refining capacity and higher oil prices. On the other hand, the firm downgraded downstream oil marketing companies from ‘overweight' to ‘underweight'. Limited pass-through of higher crude oil prices to customers is seen weighing on these companies.

 

Goldman Sachs also downgraded automobile and consumer durables companies from ‘overweight' to ‘marketweight' given their demand sensitivity to higher inflation and interest rates, and margins vulnerability to higher input and logistics costs. It also downgraded non-banking financial companies to ‘marketweight' on rising cost of funds in a tightening environment. 

 

The financial services company remains underweight on industrials and chemicals on risks of cuts in government capital expenditure, feedstock availability issues and higher costs. It also remains underweight on information technology sector on artificial intelligence-related de-rating risk and pharmaceuticals on high valuations, higher freight and input costs.

 

Goldman Sachs has also reduced its forecast for India's GDP growth for the second time in March as inflationary risks leading to higher interest rates persist. "Reflecting India's greater vulnerability to the energy shock," the brokerage lowered its 2026 GDP growth estimate to 5.9%, raised its consumer price index forecast, and expects 50 basis points rate hikes in 2026.  End

 

Reported by Ruchira Kagita

Edited by Vandana Hingorani

 

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