Global brokerage raises its December 2026 Nifty 50 target to 26,100 from 25,000, citing easing crude oil prices, improving fund flows and supportive market conditions.
Indian equity markets could have more room to rally by the end of December, with global brokerage Bernstein raising its Nifty 50 target despite the sharp recovery seen over the past few trading sessions.
Bernstein has revised its December 2026 target for the benchmark index to 26,100, compared with its earlier estimate of 25,000. The revised target reflects the brokerage's confidence in near-term market momentum, supported by easing geopolitical tensions, softer crude oil prices, lower bond yields and improving foreign investor flows.
The upgrade comes after the Nifty 50 surged nearly 11% over 12 trading sessions, gaining close to 3,000 points from its October 28 low of 22,497. The index crossed the 25,400 mark on Wednesday, November 11, as buying interest strengthened across several sectors.
What Is Driving Bernstein's Optimism?
According to Bernstein, a combination of global and domestic factors is supporting the recent recovery in Indian equities.
The easing of US-Iran tensions and moderation in crude oil prices have improved the outlook for India's external balances. As one of the world's largest oil importers, India could benefit from lower crude prices through reduced import costs, easing pressure on the current account deficit and potentially providing support to the rupee.
Lower bond yields and stronger foreign portfolio investor (FPI) inflows have also contributed to improving market sentiment. Foreign investors have returned to Indian equities in November, adding further support to the ongoing rally.
Bernstein has valued the Nifty 50 at 18.5 times its estimated FY28 earnings, compared with 18 times under its previous target.
Strong Q2 Earnings Provide Additional Support
Corporate earnings have also contributed to the positive outlook. Nifty 50 companies reported approximately 20% year-on-year earnings growth in the September quarter, while the Nifty Midcap 100 recorded growth of around 14%.
However, Bernstein cautioned that some of the improvement was supported by a favourable base effect, benefits from tax cuts and a temporary recovery in the profitability of oil marketing companies.
The brokerage expects underlying economic conditions to weaken during the second half of the financial year and beyond. It has also highlighted concerns around weak job creation, subdued consumption, limited earnings upgrades and pressure on government finances.
Financial Stocks Remain a Preferred Choice
Among large-cap sectors, Bernstein sees financial stocks as the most attractive investment opportunity at present. The brokerage believes opportunities remain relatively limited in other segments, including information technology and consumer stocks, where valuations and growth concerns continue to weigh on investor interest.
It also cautioned that India's relatively expensive market valuations and the global movement of capital towards artificial intelligence-related investments could create challenges for foreign fund inflows over the longer term.
Near-Term Optimism, But Long-Term Caution
Despite raising its December target, Bernstein has maintained a Neutral outlook on Indian equities over the next 12 months. Its near-term Trading Buy stance reflects expectations of further gains before the end of the year, rather than confidence in a sustained long-term rally.
For investors, the brokerage's latest assessment presents a mixed picture: improving market momentum and supportive global conditions could drive further upside, but earnings sustainability and elevated valuations remain important risks.
The coming weeks will be crucial in determining whether the Nifty can maintain its recovery and move towards Bernstein's revised target of 26,100.
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