1 week ago
Reuters Poll Cuts India Equity Outlook as Foreign Funds Leave
Analysts think India’s stock market may grow slowly compared with several other Asian markets.
The Nifty 50 is expected to rise by the end of 2026, but forecasts have been reduced again.
Foreign investors have sold many Indian shares and moved money to markets they consider cheaper or more connected to artificial intelligence.
This selling has weakened India’s currency, the rupee.
Higher oil prices are another concern because they can make Indian investments less attractive.
Still, most analysts do not expect a large stock-market fall in the next three months.
Some analysts believe company profits will keep improving.
Indian households are also investing more money, which is helping support the market.
The Nifty 50 is forecast to reach 25,556 by end-2026, about 5% above Tuesday’s close of 24,334.55.
Analysts’ median forecasts for end-2026 and mid-2027 were the lowest since polling began for those periods.
Foreign investors have sold roughly 2.4 trillion rupees ($25.1 billion) of Indian shares this year.
The rupee has fallen 6% against the dollar, while crude oil prices remain near $90 per barrel.
Domestic systematic investment plans contributed more than 319.61 billion rupees in July, helping support the market.
- Who
- Indian equity analysts, foreign investors, domestic investors, and Indian companies.
- What
- Analysts have reduced their outlook for Indian equities for the third consecutive quarter as foreign funds seek opportunities elsewhere in Asia.
- Where
- India, compared with other Asian markets including Japan, South Korea, Taiwan, Thailand, Malaysia, and the Philippines.
- When
- The forecasts came from a Reuters poll conducted August 13–26; the market is down more than 7% this year.
- Why
- Foreign investors are responding to perceived value and artificial-intelligence opportunities elsewhere, while India faces a weaker rupee and elevated crude oil prices.
Cautious analysts
Optimistic analysts
Market direction
Cautious analysts
India’s weaker performance than other Asian markets suggests that favorable economic data may not be translating into sufficient investor confidence.
Optimistic analysts
Improving corporate earnings could allow Indian equities to exceed their previous all-time high, even under baseline 2027 earnings growth.
Foreign investment
Cautious analysts
Foreign investors are selling Indian shares because other Asian markets offer cheaper valuations or greater exposure to artificial-intelligence themes.
Optimistic analysts
Domestic investors, particularly through systematic investment plans, are providing support while foreign investors remain cautious.
Near-term correction
Cautious analysts
Seven of 27 analysts expected a correction of at least 10% in Indian stocks over the next three months.
Optimistic analysts
Twenty of 27 analysts said such a correction was unlikely in the next three months.
Key facts
- Nifty 50 forecast
- 25,556 by end-2026, 26,300 by mid-2027, and 27,450 by end-2027.
- BSE Sensex forecast
- 81,608 by end-2026, 85,700 by mid-2027, and 89,000 by end-2027.
- Poll size
- 28 equity analysts participated in the Reuters poll.
- Foreign selling
- Roughly 2.4 trillion rupees ($25.1 billion) of Indian shares sold this year.
- Rupee performance
- The rupee has declined 6% against the dollar this year.
- Correction outlook
- 20 of 27 analysts said a decline of 10% or more was unlikely in the next three months; seven said it was likely.
- Domestic investment
- Systematic investment plans contributed more than 319.61 billion rupees in July.
Quotes
Anil Manghnani
Director at Modern Shares and Stockbrokers
“When the entire world is doing well and India is not, that tells me rosy economic data that looks good on paper is actually not that rosy.”
CNBC TV 18
“Even if we assume baseline earnings growth for 2027, it is not difficult to breach the all-time high.”
CNBC TV 18
Sources
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