Brokerages are entering 2026 with cautious optimism on Indian equities. The Nifty 50 saw sharp swings last year as foreign investors pulled out, but buying by domestic investors helped limit the damage and kept the market afloat.
What has changed in 2026 is the earnings picture. Companies have largely stopped cutting profit estimates, which was a major market concern. As Sunil Koul, Head of Equity Strategy at Goldman Sachs, put it, the “year-long earnings downgrade cycle has bottomed out,” suggesting that the worst may be over.
Still, the choppy 2025 market showed that domestic buying alone cannot drive a rally. Global interest rates, geopolitical stability, foreign investor behaviour and the speed of profit recovery will decide the upside.
Superstar investor Vijay Kedia said, “2025 reminded investors that markets move in cycles, and expecting consistently high returns every year is unrealistic. The correction was necessary to restore balance. Going ahead, earnings rather than stories will decide which stocks perform in a more selective market.”
In this edition of Chart of the Week, we look at what brokerages expect from the Nifty 50 by the end of 2026, why their views differ, and how these forecasts compare with what they got right and wrong at the start of 2025.
Last year’s market sets the tone for 2026
At the start of 2025, most brokerages forecast the Nifty 50 between the low 26,000s and high 28,000s for the end of the year. Global houses like Goldman Sachs, Citi, Bank of America and Jefferies largely sat around 26,000–27,000, while domestic brokers such as ICICI Direct and Bajaj Broking were more optimistic, calling for levels near 29,000.
The market ended somewhere in the middle. The Nifty 50 touched a record high of about 26,326 in early December before easing. Conservative forecasts were closer to the actual number, while the bullish calls overshot. For the year, the index gained 2,484.8 points or 10.5%, a decent return but far from a breakout rally.
The miss was not driven by a crash. There were plenty of reasons why: earnings recovery was slower than expected, and foreign investors remained cautious. Domestic mutual funds absorbed much of the selling but could not fully offset weak global sentiment.
Strategists note that domestic flows limited the downside, but did not create the upside. This lesson is shaping 2026 expectations.
Earnings shape Nifty 50 forecasts for 2026
In 2025, domestic brokerages were more bullish than global firms and overshot. For 2026, the balance has flipped. Global brokerages are more optimistic, while domestic firms are cautious, shaped by last year’s miss and a sharper focus on earnings.
Brokerages agree on one point: any gains in 2026 are set to be earnings-led. Most large houses forecast the Nifty 50 ending the year with a 10–15% rise from current levels. Jefferies and Citi are slightly more cautious, while Goldman Sachs, Bank of America, and Nomura expect the index to reach the upper 28,000s to around 29,300.
Domestic brokers broadly agree with this range. Kotak targets just above 29,000, while Axis Securities is slightly more conservative. Even the most optimistic projections assume steady progress, not a sharp jump.
But brokers are no longer counting on big foreign inflows or soaring valuations. Instead, their focus is on earnings, domestic liquidity, and supportive economic conditions.
Citi describes this as a “Goldilocks” scenario: growth stays strong, inflation is low, and interest rates ease. JP Morgan’s Rajiv Batra adds that “trade deals and earnings recovery could help mid-sized companies benefit from lower borrowing costs and improved sentiment.”
Yet caution rules. BofA Securities expects markets to inch higher mainly because Indian investors continue to invest, not because stocks are suddenly cheap. Their forecast assumes stable valuations and moderate profit growth. Gains are expected, but not fireworks.
Optimistic firms such as Kotak Securities, JP Morgan, and Jefferies favour cyclical sectors like real estate, utilities, IT, and telecom, citing improving demand and credit growth. More cautious brokers like Axis Securities and Citi prefer banks, consumption, healthcare and autos, focusing on predictable domestic demand and improving rural trends.
Why views differ
Brokerage targets of roughly 28,000 to just over 30,000 reflect different views on three main risks. Kotak and JP Morgan foresee a two-stage improvement in earnings, with modest growth in FY26 followed by stronger momentum in FY27. Others, like Axis and Citi, expect slower progress.
Global liquidity is another factor. Earlier US rate cuts could bring foreign investors back, while delays may keep inflows weak and cap market gains.
Finally, a US–India trade deal could boost markets, but most brokers do not assume this in their base forecasts. Nomura illustrates this balance, seeing India’s 2025 underperformance as a correction from stretched valuations. 2026? That will depend on earnings growth and policy stability. It’s back to basics.
