In a strong endorsement of India’s domestic macroeconomic stability and long-term structural potential, Japanese brokerage firm Nomura has revised its Nifty 50 target upward by 1,170 points to 26,140 for March 2026. The significant upgrade comes even as global markets continue to grapple with lingering uncertainties around earnings downgrades, export demand softness, and tighter financial conditions.
Nomura’s new target implies a healthy 6 percent upside from current levels and reflects growing investor conviction that India’s equity markets will remain resilient, supported by steady reforms, strong domestic liquidity, and macroeconomic discipline. The move also accompanies a curated list of 17 top stock picks, with a pronounced tilt toward domestic demand-driven sectors.
“The Indian equity markets have been resilient in the recent past despite corporate earnings estimate cuts and global uncertainties. We think positive domestic macros, as reflected in the significant fall in yields and the relatively lower beta of Indian equities underpinned by consistent domestic flows, are supporting market valuation. The performance of global equity markets despite trade-related uncertainties implies that equity risk premiums remain low,” said Nomura in the note.
What’s Driving the Upgrade?
Nomura has based its upgraded Nifty target on a price-to-earnings (P/E) multiple of 21 times FY27 earnings, up from the earlier 19.5 times. This upward revision in valuation multiples is driven by three major factors: relatively low bond yields, strong domestic equity inflows, and reduced tail risks on the macroeconomic front.
The brokerage noted that the Indian market is currently trading at 20.5 times one-year forward earnings, which is close to the upper end of its three-year trading range. Despite this, Nomura argues that the equity risk premium remains attractive. The spread between India’s earnings yield and 10-year bond yield is at -1.4 percent, a level that still lies within the acceptable band when compared historically.
Further supporting the bullish view, India’s economic fundamentals have remained broadly intact. Nomura observed that inflation, crude oil prices, and interest rates are on a downward trajectory—developments that are likely to help preserve consumption momentum and contain external vulnerabilities. While FY25 earnings growth has slowed to 8 percent, Nomura expects an acceleration to 12 percent in FY26 and further to 15 percent in FY27, which underpins the firm’s upgraded market outlook.
Stock Strategy and Sector Preferences
In its latest strategy note, Nomura highlighted 17 high-conviction stock picks that align with its constructive view on India’s domestic economy. The firm remains overweight on sectors that are primarily driven by internal demand. These include financials, consumer staples, autos and discretionary consumption, oil and gas, telecom, real estate, and select power and healthcare names focused on the domestic market.
Financials stand out as the top pick, driven by their low earnings volatility, attractive valuations, and improving return ratios. Nomura sees banks as key beneficiaries of India’s investment and consumption cycles.
Conversely, the brokerage has turned cautious on IT services, cement, metals, and certain export-oriented pharmaceutical names due to global demand weakness, input cost pressures, and emerging risks such as potential US tariffs on Indian drug exports. However, Nomura views any correction in pharma stocks as a potential opportunity, assuming that companies can eventually pass on costs and preserve profitability.
The tilt toward domestically-focused companies reflects Nomura’s expectation that India’s growth story over the next 18–24 months will rely more on internal engines—namely infrastructure development, urban consumption, and policy continuity—than on external trade dynamics.
Staying consistent with its preference for domestic-oriented themes, Nomura has released a curated list of 17 high-conviction stock ideas. Among large-cap names, the brokerage favours Axis Bank, ICICI Bank, State Bank of India, Bajaj Finance, Godrej Consumer Products, Mahindra & Mahindra, Larsen & Toubro, CG Power, Reliance Industries, Tata Power, and Macrotech Developers (Lodha). In the small and mid-cap space, its top picks include Federal Bank, Marico, Dixon Technologies, Uno Minda, GE Vernova T&D India, Lupin, MedPlus Health Services, and Dr. Lal Path Labs.
Risks on the Horizon
Despite the optimism, Nomura is not dismissing macro risks. The firm acknowledged that the outlook is still clouded by challenges including weak investment momentum outside government capex, fiscal consolidation pressures, low household financial savings, and sluggish export recovery. Additionally, valuations are elevated, making the market vulnerable to earnings disappointments or geopolitical shocks.
However, Nomura emphasized that these risks are manageable within the current environment, and any meaningful correction could present a buying opportunity for long-term investors.
For investors, this is a timely cue to rebalance portfolios toward resilient, fundamentally strong businesses that cater to the India growth story.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.