Nifty Prediction 2025: Is A 26,000 Target Within Reach In Next 12 Months?

Nifty 50 Prediction: UBS has projected a potential 8% upside for India’s benchmark index, the Nifty 50, predicting that it could reach a target of 26,000 over the next 12 months.

In its latest report, the global financial services firm highlighted a positive outlook for several sectors while cautioning about potential risks from global growth uncertainties.

Positive Sector Outlooks

UBS maintains an optimistic stance on consumption-driven sectors, including retail, consumer staples, two-wheelers, and travel. The firm believes these sectors are well-positioned to outperform in the coming year, backed by continued domestic consumption.

It also sees potential in financials, real estate, cement, and hospitals, suggesting a favourable environment for growth in these industries.

"We are positive on most consumption-oriented sectors spanning retail, staples, two-wheelers (2Ws), and travel," UBS noted in the report. "We are also positive on financials, real estate, cement, and hospitals."

Caution on Industrials and IT Sectors

While the outlook remains positive for many sectors, UBS expressed caution about the industrials and infrastructure segments. The firm anticipates that government capital expenditure (capex) growth will slow to a mid-to-high single-digit compounded annual growth rate (CAGR) between FY25 and FY27, mainly due to fiscal pressures, such as the payouts related to the eighth pay commission and state governments’ fiscal deficits.

"Expect government capex growth to slow to a mid-to-high single-digit CAGR over FY25- 27," UBS stated, citing factors like social welfare spending and global growth uncertainties.

The firm also remains cautious about the IT sector, primarily due to its high exposure to the US market and potential risks tied to a global economic slowdown.

Despite these concerns, UBS noted that its IT team remains constructive on specific sub-sectors under coverage, believing that downside risks to current valuations are limited.

"We are cautious on the IT sector due to potential earnings risk given high exposure to the US and concerns on global growth slowdown," the report highlighted.

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India’s Economic Outlook

On the macroeconomic front, UBS revised its GDP growth estimates for India, lowering its projections for FY26 by 30 basis points to 6% and for FY27 by 20 basis points to 6.4%.

These downward revisions reflect concerns about a potential global economic slowdown, though UBS anticipates that factors like lower crude oil prices and potential domestic consumption stimulus could help offset some of the pressure.

"Global growth risks are weighing on the outlook, but lower crude prices and domestic consumption stimulus could provide some relief," the firm stated.

Downside Risks and Earnings Projections

While UBS is generally positive on India’s equity markets, the report acknowledged the possibility of downside risks if global growth weakens significantly.

In this scenario, the Nifty 50 could face a decline of up to 6%, as earnings growth estimates for FY26 could be revised down from 13% to 8%.

"Consensus earnings growth estimates for FY26 could fall from 13% to 8%, which could lead to a downside of up to 6% for the Nifty 50 if global growth weakens significantly," UBS concluded.