Citi projects 10% rise in Nifty 50 by 2026-end amid a ‘Goldilocks’ economy

Citi Research expects India's benchmark Nifty 50 to rise to 28,500 by end-2026, up 10.3% from last close, citing an improving consumption backdrop, sustained rural demand and early signs of an urban recovery. The market outlook mirrors similar calls from HSBC, JPMorgan and Nomura in the last few weeks.

The National Stock Exchange building in Bandra Kurla Complex, Mumbai. The Nifty 50 has gained 9.3% in 2025 so far, underperforming its emerging market and Asian peers. (Livemint)

According to Citi analysts Surendra Goyal and Vijit Jain, the key headwinds that hurt Indian markets in 2025—subdued earnings, relatively higher tariffs when compared to emerging markets, and a lack of AI themes—are now reversing. The “goldilocks” conditions of resilient growth and benign inflation would converge to support equities in 2026, they said.

“Conviction in low double‑digit earnings growth is building—which should support the market—while a favourable India-US trade deal in the coming weeks or months could help reverse its underperformance,” they said.

The Nifty 50 has gained 9.3% in 2025 so far, underperforming its emerging market and Asian peers. Both Nifty 50 and the 30-stock BSE Sensex hit record highs in November after 14 months but failed to sustain the rally since.

On the macroeconomic front, Citi expects India's GDP growth rate to hold near 7.1% in FY27 versus 7.5% in FY26, with stronger discretionary demand, faster corporate and retail credit growth, and stable asset quality driving a corporate earnings recovery. The brokerage projects a surplus balance of payments worth $20 billion in FY27 on an improving current account and returning capital flows. It sees the rupee at 91 per US dollar.

The brokerage has removed Kotak Mahindra Bank Ltd. and GAIL (India) Ltd. from its top large-cap picks, added Mahindra & Mahindra Ltd., and brought Aavas Financiers Ltd. into its preferred midcap basket. Its contrarian ideas include ICICI Prudential Life Insurance Ltd., Jubilant FoodWorks Ltd., HPCL, Lupin Ltd. and Voltas Ltd.