Nifty 50 to Reach 29,500 by 2026

Indian equities may be setting up for a stronger phase after a year of muted returns. The Nifty 50 is projected to climb to 29,500 by December 2026, driven by an earnings recovery, supportive macro conditions, and more reasonable valuations across segments.

Market Outlook

The Nifty 50 is valued at 21 times FY28E earnings, implying a target of 29,500. The corresponding Sensex target is at 98,500. The earnings per share are expected to rise to Rs 1,400 by FY28, translating into a 15% compound annual growth rate over FY26–FY28.

Stocks and Sectors to Watch

Seven stocks have been identified as key picks, including Bajaj Finance, Bank of Baroda, Bharti Airtel, KPIT Technologies, Phoenix Mills, Dalmia Bharat, and NRB Bearings, with potential upsides ranging from 17% to 32% from current levels.

• Banking and financial services are expected to benefit from a revival in credit growth and regulatory convergence between public and private sector banks.
• Information technology is expected to see valuation support and an expected growth recovery in FY26.
• Capital goods and real estate are seen riding a multi-year investment and urbanisation cycle.

Earnings Revival

The turning point for markets is already visible, with Q2 FY26 marking a recovery in corporate profitability. The listed universe posted 12% year-on-year earnings growth during the quarter, while companies outside the Nifty 50 clocked a sharper 21% growth, a multi-quarter high.

Earnings are on the cusp of revival, with a strong second half of FY26 expected to further support profit growth across sectors such as banking and financial services, telecom, and capital goods.

Valuations

The Nifty’s two-year forward price-to-earnings multiple of about 18.6x remains within one standard deviation of its long-term average. Mid- and small-cap stocks now offer a better risk-reward after a weak 2025.

Remember, this is perspective, not prediction. Do your own research before making any investment decisions.