Can Nifty 50 touch 28,000 this year? Here’s what Bernstein has to say

Synopsis: As market conditions evolve, let’s explore whether the Nifty will touch 28,000. Global brokerage Bernstein has downgraded its 2026 outlook for the Indian market to ‘neutral’, projecting an 8% rise in the Nifty index with a target of 28,100. In this article, we examine the factors influencing this target.

The Indian stock market has experienced a significant rally over the past few months, with the Nifty 50 experiencing considerable consolidation in recent days. As global and domestic market conditions continue to evolve, investors and traders are left wondering whether the Nifty 50 will touch 28,000 this year.

After a strong run in recent years, the market has shown signs of moderation, with analyst Bernstein projecting more modest growth. The potential for the Nifty to hit 28,000 will depend on a combination of economic factors, corporate earnings, and government policies in the coming months.

Bernstein’s Views on Nifty

Global brokerage firm Bernstein has downgraded its outlook on the Indian market for 2026 to ‘neutral’, projecting only an 8% rise in the Nifty index, setting a target of 28,100. Venugopal Garre, the head of research for India at Bernstein, explained that the firm’s outlook isn’t meant to be contrary to others, but rather reflects the fact that there are several factors holding back the market from achieving big gains in the short term.

Rationale for this Target

Economic Growth Outlook

Garre forecasts India’s GDP growth will moderate from 8% to 6.5% in the coming quarters, attributing this to a peak in the macroeconomic environment. Although he does not foresee an economic collapse, he believes the growth cycle has passed its zenith. There are limited policy tools available to stimulate further economic expansion, and a shift of responsibility to the private sector could be challenging due to its potential unpreparedness.

Market Valuations and Earnings Growth

Garre notes that the anticipated recovery in earnings growth is largely reflected in current market valuations, making further significant market growth difficult. Bernstein’s Nifty target of 28,100 suggests limited upside, with a 13.5% earnings CAGR forecast over two years and a 19x two-year forward multiple. This indicates that, despite macro stability, major growth is unlikely from the current market levels.

Sectoral Views

Real Estate: Bernstein has upgraded the real estate sector, expecting a recovery due to market digestion and potential rate cuts. However, Garre cautions that expected returns will be modest, likely better than the Nifty’s 8%, but far from the 30-40% returns seen in previous cycles.

Consumer Staples: The sector has been downgraded due to heightened competition from quick-commerce players, muted volume growth, and uncertainties around rural demand.

India-US Trade Deal Impact

He’s not convinced that the India-US trade deal will have a big, lasting impact. He thinks it’s more of a short-term boost for the market rather than a game-changer for the economy. He expects only small changes, like a slight growth in the stock market and a small increase in the value of the rupee. Since India and the US don’t really align well in other areas, he believes the deal won’t lead to long-term, sustained growth.

Artificial Intelligence (AI) Adoption

Garre believes that the real-world impact of AI in India will take time. He views it as a “three to four-year story” for significant corporate adoption, stating that AI technology is still in its early stages, and its practical applications are limited, and widespread AI integration will likely take longer than the current market hype suggests.

Monetary Policy and Rate Cuts

Garre anticipates the Reserve Bank of India (RBI) will cut rates by 50 to 75 basis points this year. However, due to currency management issues, he believes there is little room for more aggressive monetary action in the near future.

In conclusion, Garre emphasized that the economy remains stable and is not facing a collapse. He highlighted several sectors where Bernstein is maintaining an optimistic stance, such as financials, telecom, and consumer tech, with slight overweights in IT and real estate. Additionally, he pointed out that a busy year for IPOs and fundraising will provide investors with numerous new opportunities.

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