GLOBAL brokerages are turning more bullish on a revival in Indian stocks, with Citi raising its end-2027 Nifty 50 target to 28,000 and HSBC upgrading the market to "overweight."
The calls come after the Nifty surged more than 10% over seven sessions through Friday with foreign investors buying more than $4.1 billion of shares this month, marking the strongest inflow in more than 2 years. Meanwhile, emerging markets and Nasdaq have tanked amid a rout in AI stocks.
Indian markets spent much of 2026 underperforming global peers as investors chased AI-linked investments and higher oil prices dented the outlook for Asia's third-largest economy. But a sharp drop in oil prices and a fall in AI stocks since the US mid-term elections have prompted a rethink.
"Decent earnings, lower oil prices and more measured AI spending are aligning to support India, with a potential rotation from crowded AI trades adding to foreign inflows," said Citi analysts, whose 28,000 Nifty target implies a roughly 12% upside from the index's last close.
A $10-per-barrel decline in crude could narrow India's current account deficit by 30 to 40 basis points, ease inflation by roughly 50 basis points and lift Nifty earnings per share by about 2%, Citi said.
The brokerage sees scope for a broader allocation shift as AI spending becomes more measured and estimates that a 100-basis-point increase in India's active weight among EM fund managers could trigger roughly $12 billion in inflows.
Citi raised its valuation multiple to 18 times forward earnings from 17 times, arguing that a favourable mix of resilient profit growth, softer crude prices and a rotation away from crowded AI trades could sustain the market's momentum.
HSBC said resilient earnings, strong bank credit growth and policy measures to support the Indian rupee have made the market "more compelling" after its underperformance versus emerging-market peers this year.
"In an environment where investors are seeking to diversify away from concentrated AI exposure, India stands out for its market depth, domestic demand orientation and relatively resilient macro backdrop," HSBC analysts said.
HSBC prefers banks, industrials, consumer discretionary, real estate and hospitals.
Within industrials, the brokerage sees opportunities in capital goods, cement, ports and electronics manufacturing services, while also favouring retailers and autos over consumer staples. - Reuters
