Citi raised the Nifty target to 28,000 from 26,000. The brokerage expects earnings to grow by 15-16 per cent through FY28. Lower oil prices and strong domestic flows helped this outlook. Citi said, “Over the past two years, AI has crowded out almost everything else.” Risks like Middle East volatility remain.
Citi expects Nifty earnings to grow at a compounded annual rate of 15-16 per cent over FY26-FY28, with September quarter results sustaining the momentum seen in the June quarter, Bloomberg reported, citing the foreign brokerage.
Lower crude prices could support both the macroeconomic backdrop and corporate earnings. A $10 decline in oil prices improves the current account deficit by 30-40 basis points (bps), lowers inflation by about 50 bps and boosts Nifty earnings per share (EPS) by about 2 per cent, Citi said.
It has extended its forward estimates to December 2027 from September 2027 and raised the multiple for India's equity benchmark to 18 times from 17 times.
A more measured pace of AI spending following the US midterm elections could encourage a rotation into non-AI assets, potentially benefiting Indian equities, Bloomberg reported, citing Citi. “Over the past two years, AI has crowded out almost everything else. Our analysis suggests a 100bp increase in India active weight could drive $12 billion of inflows; combined with resilient domestic flows, creating a supportive backdrop,” it said.
Citi said some industrial stocks exposed to the data centre theme may continue to see near-term pressure.
Key risks include volatility in the Middle East, a slowdown in consumption and the impact of AI on employment.