Goldman Sachs(US:GS) Hua Er Jie Jian Wen·2025-11-10 10:04Core Viewpoint - Goldman Sachs has shifted its stance on the Indian stock market to a positive outlook, upgrading its rating to "Overweight" due to supportive government policies, improved corporate earnings prospects, and low foreign investor holdings [1][3] Market Performance - The Nifty 50 index target for the end of 2026 is set at 29,000 points, indicating a potential upside of approximately 14% from current levels [1] - Since 2025, the Indian stock market has underperformed compared to regional markets, marking the largest lag in over two decades [3][4] Factors Supporting Optimism - Supportive Policies: The Indian central bank has implemented several easing measures, including interest rate cuts and tax reductions, which are expected to boost economic growth and consumer spending [5] - Earnings Recovery: Corporate profit growth for MSCI India index constituents is projected to accelerate from 10% in 2025 to 14% in 2026 [3][5] - Low Foreign Holdings: Foreign institutional investors have significantly reduced their holdings in Indian stocks, creating potential for recovery as earnings improve [5] - Valuation Defense: Despite being one of the most expensive emerging markets, the valuation premium has decreased from 85-90% to 45%, approaching historical averages [5][6] Investment Recommendations - Sectors to Favor: Goldman Sachs recommends focusing on sectors benefiting from domestic economic growth, including financials, consumer goods, and defense [7][8] - Cautious on Exports: The firm has downgraded the information technology sector to "Underweight" due to low growth visibility and uncertainties related to AI [8]