Indian Markets Analyzed: Nomura’s 2026 Nifty Target

Key Points

• Nomura predicts Nifty 2026 target of 29,300, a 12% gain.
• This estimate uses 20x one-year forward earnings and low risk premia.
• Strong domestic investment and earnings growth are expected.
• Selective investment in undervalued sectors is recommended by Nomura.
• Focus on cyclical recovery and underappreciated earnings potential.

Nomura, a global brokerage firm, has made a forecast for the Indian stock market in 2026, predicting a significant rise. They believe the Nifty 50 index could reach 29,300 by the end of 2026 – that’s roughly a 12% increase from where it stands today. This prediction is based on the idea that companies will earn around 20 times the expected profits over the next year, assuming that economic risks aren’t very high.

To arrive at this target, Nomura thinks Indian companies will trade at a price-to-earnings ratio of 20, meaning investors are willing to pay 20 rupees for every 1 rupee of profit. They also believe that economic risks, or “risk premia,” won’t be very high, which means investors won’t demand extra returns to compensate for the uncertainty.

Several factors are supporting this optimistic outlook. Nomura anticipates a “cyclical recovery,” meaning the economy will get better over time. This recovery will be fueled by growing profits for companies, especially in industries like chemicals, oil & gas, and cement. The government is also trying to encourage growth with policies that support local businesses and make things made in India.

A lot of money is already flowing into Indian stocks, with 13% of savings going into stocks in the current year (FY25). This is helping to boost the market. However, not everyone is investing – foreign investors are only slightly involved. Nomura doesn’t expect a big surge in foreign investment, but they do think things might slowly improve if global stock markets go up.

Companies are expected to start making more money in 2026, with growth rates of around 14.6% and 13.2% in the following years. But some experts think these profit predictions might be a little too high. If the economy doesn’t grow as quickly as expected, or if the trade deficit (when India imports more goods than it exports) remains high, there could be some problems.

Because stock prices are already a bit high, Nomura recommends a careful investment strategy. They suggest avoiding stocks that are popular right now but might not live up to expectations. Instead, they want investors to look for companies where profits are currently low, but could improve. Some good choices might be companies that make vehicles, make medicine, provide IT services, or lend money.

Nomura also thinks it’s a good idea to invest in companies that export goods (especially when global markets are doing well) and to be careful with companies that get a lot of help from the government. The brokerage is optimistic about financials, pharmaceuticals, IT services, consumer goods, real estate, and internet companies. They are more cautious about car, oil & gas and metal industries, as well as consumer staples and infrastructure.

Nomura has a list of 20 top stock picks, including well-known companies like ICICI Bank, Infosys, and Bajaj Finance, as well as some smaller, more promising companies. Investors should remember that the Indian stock market is currently valued higher than it has been in the past, but with strong domestic investment and potential for growth, it remains an interesting place to invest.

“Focus on companies with strong potential for growth and avoid overhyped stocks.”