Goldman Sachs sees Nifty rallying to 26,500, signals nearly 9.5% upside

Mumbai: Goldman Sachs said it sees room for Nifty's recovery to 26500, implying an upside of nearly 9.5% from current levels, citing improvement in India's outlook in the wake of lower commodity prices, stabilised currency, and healthy second-quarter earnings expectations. The Nifty ended at 24,211 on Monday, nearly unchanged from Friday's closing, after falling as much as 0.9% earlier in the day. The Sensex closed at 77,616.

Renewed tensions in West Asia may fuel near-term volatility, but 'ultra-light' foreign investor positioning means there is ample room for flows to return, according to the brokerage.

"Foreign selling is likely over, and sentiment should turn incrementally favourable on improved domestic outlook and ultra-light foreign positioning," said Goldman in a client note.


The brokerage said it recommends "going long" on banks, tourism and energy refiners. It favours large-caps over mid-caps, power utilities over agriculture stocks, and sectors focused on the domestic economy over exporters.

"We expect a rotation from 'Growth' to 'Value' as investors look for reasonably valued pockets in anticipation of a recovery,"

Reliance Industries, HDFC Bank, Adani Power, Adani Enterprises, Kotak Mahindra Bank, NTPC, Hindustan Aeronautics, Eternal (Zomato), Power Grid of India, Adani Green Energy, InterGlobe Aviation (IndiGo), HDFC Life Insurance, Indian Hotels, Mazagon Dock Shipbuilders, and MakeMyTrip are among its top 15 large-cap bets.