Goldman Sachs Lowers 12-Month Nifty Target to 25,500: What Investors Need to Know

Goldman Sachs Revises Nifty Growth Forecast Amid Economic Uncertainty

In a notable shift, Goldman Sachs has lowered its 12-month forecast for the Nifty 50 index to 25,500, down 5.6% from the previous target of 27,000. This adjustment indicates a potential upside of approximately 12% from the index’s current level of 22,460. As the landscape for Indian equities evolves, investors are keenly observing these projections.

Short-Term and Long-Term Projections

Goldman Sachs has established a three-month target of 23,000 for the NSE benchmark, with expectations that the index could reach 24,000 within the next six months. This suggests cautious optimism for investors navigating the market.

12-month target: 25,500
Three-month target: 23,000
Six-month target: 24,000

Local Factors Affecting Market Stability

While local challenges for Indian stocks are beginning to stabilize, the brokerage warns that volatility may persist in the near future. Heavy domestic investor ownership in small- and mid-cap stocks coupled with ongoing global uncertainties are contributing to this situation.

Goldman Sachs has decided to maintain a marketweight position on India, having downgraded its stance from overweight in October 2024. This decision reflects concerns regarding a cyclical slowdown in both economic growth and corporate profitability.

Economic Growth Insights

According to Goldman Sachs economists, the GDP growth rate may have reached its lowest point, but a recovery is anticipated to unfold gradually. The latest figures reveal that Q4CY24 real GDP growth rebounded to 6.2% YoY, up from a seven-quarter low of 5.6% YoY in Q3CY24. This improvement was primarily fueled by a rise in private consumption, although investment growth remains lackluster.

Looking ahead, projections indicate that quarterly real GDP growth will hover between 6% and 6.7% on a year-over-year basis over the next four quarters, with an expected full-year growth rate of 6.4% for CY25.

Earnings Sentiment and Market Trends

Goldman Sachs notes that the cycle of earnings downgrades is not yet over, though the pace of these cuts has lessened. The performance for the December quarter has exceeded already lowered expectations. The brokerage highlights that market technicals suggest a potential bottoming out for Indian equities, given that the Nifty 50 has experienced five consecutive months of decline, correcting 14% from its peak in September.