Goldman Sachs Downgrades Indian Equities; Slashes Nifty 50 Target To 25,900

Premier Brokerage major Goldman Sachs lowered its rating on Indian equities, and slashed its target for Nifty 50, amid expectations of an. earnings downgrade cycle as a result of energy price hike amid the Iran war.

The reduced stance on the market from ‘overweight’ to ‘marketweight’ on less attractive risk/reward than north Asian markets comes amid worsening macroeconomic conditions and slowing earnings growth.

Further, it has also slashed its Nifty 50's 12-month target to 25,900 fro 29,300 previously, based on. earnings growth of 8% in CY26 in CY27 and 19.5x target PE.

“We see risks tilted to the downside in the next 3 to 6 months as we think the market may not be pricing in the full extent of earnings cuts,” Goldman Sachs noted.

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The global investment bank was of the view that higher oil prices for a longer duration has impacted India’s macro outlook and will force consensus profit estimates lower over the next few quarters.

The brokerage house's economists have lowered India’s GDP growth estimates for 2026 by 1.1 pp to 5.9%, and raised CPI forecast by 70 bps.

Further, they expect a widened current account deficit of 2% of GDP, weakened rupee, and 50 bps repo rate hikes by the Reserve Bank of India (RBI) in 2026.

However, India has to some extent reduced dependence on crude oil imports from the Middle East with increasing sourcing from Russia, but is still overwhelmingly dependent on the Middle East for gas imports (over 90% of LPG imports), according to a Nirmal Bang report.

"Opening up of the Strait of Hormuz is more crucial than a ceasefire, as far as energy markets are concerned," the brokerage firm noted.

Meanwhile, Goldman Sachs noted that India’s full-year earnings growth could be lower by c.9%, higher than the 6% impact to MSCI Asia Pacific ex-Japan Index earnings.