A sharp escalation in the Middle East conflict has prompted a string of global brokerages to downgrade their outlook for Indian equities, amid concerns about the impact of elevated crude oil prices on inflation, interest rates, economic growth, and corporate earnings.
Citi Research, Nomura, Goldman Sachs, and Bernstein have all lowered their Nifty 50 targets, warning that a prolonged spell of high oil prices could trigger earnings downgrades and keep market sentiment under pressure.
India’s benchmark stock market index, the has already lost over 10% since the US-Iran war began.
The common thread across these calls is India’s vulnerability to imported energy costs. Higher are seen as a key risk to corporate profitability and macroeconomic stability, especially if tensions in West Asia persist and keep supply concerns elevated. While some brokerages still see upside in the benchmark index from current levels, most have turned more cautious on valuations and earnings assumptions.
Let’s look at the new Nifty targets by global brokerages
Citi: Citi Research has lowered its year-end target for India’s benchmark Nifty 50 index, cautioning that the ongoing conflict in the Middle East could weigh on the country’s economic growth and corporate earnings.
The global brokerage has cut its Nifty target to 27,000 from the earlier estimate of 28,500. Even after the reduction, the new target still suggests a possible upside of about 17%.
Citi has also lowered the valuation multiple used for the target. The brokerage reduced the Nifty target multiple to 19 times the one-year forward price-to-earnings ratio, compared with 20 times earlier.
Nomura: Nomura has turned more cautious on Indian equities as the West Asia war has proved more disruptive to energy supplies and prices than previously anticipated. The brokerage now expects the 50-stock Nifty to reach 24,900 by December 2026, cutting its by 15% from 29,300 earlier.
According to Nomura, the biggest concern is the impact of sustained high oil prices on earnings. The brokerage said it sees a 10%–15% risk to consensus earnings estimates for the financial year 2027 if crude prices remain elevated for a prolonged period.
At the same time, Nomura said a deeper market correction could create a buying opportunity for long-term investors, even as it warned that near-term volatility may not be over yet.
“We think an additional 5% correction (similar to the correction during the Russia-Ukraine war) is a distinct possibility in the near term, with small- and mid-cap stocks at relatively greater risk. Adverse flow dynamics can drive even lower in the short term. A correction beyond 5% from current levels should present a buying opportunity from a long-term perspective, in our view,” added Nomura.
Goldman Sachs: Goldman Sachs has downgraded Indian equities to ‘marketweight’ from ‘overweight’ and sharply reduced its Nifty 50 target, citing worsening macro conditions and the risk of a broad-based earnings downgrade cycle.
The brokerage has cut its 12-month Nifty target to around 25,300–25,900 from earlier projections of about 29,300–29,500, implying a reduction of roughly 14%.
Goldman Sachs expects corporate earnings estimates to be revised downward over the next two to three quarters, particularly in sectors linked to domestic consumption and investment. The brokerage has already lowered its earnings growth forecasts for India to 8% for 2026 and 13% for 2027, significantly below its earlier expectations.
At the core of Goldman’s downgrade is the sustained rise in energy prices, driven by disruptions linked to tensions around the . The brokerage said higher-for-longer oil prices are worsening India’s macroeconomic outlook, given the country’s heavy reliance on imports.
It estimates that a $45-per-barrel increase in crude over a three-month period could shave about 9% off India’s full-year earnings growth, a sharper impact than expected in the broader Asian region.
Bernstein: Bernstein has also cut its Nifty 50 target for calendar year 2026 to 26,000, citing elevated crude oil prices, rising inflation and the likelihood of delayed rate cuts. The brokerage said it sees a realistic chance of inflation breaching 6% this summer, with rate cuts potentially being pushed back by at least two quarters and GDP growth likely to taper.
“We retain our neutral stance and believe the rupee will continue seeing pressure this year at different points. This means that the overall markets for 2026 could well be flat to slightly negative,” the brokerage said.
Bernstein said the current risk-reward remains in the neutral zone and cautioned investors against dismissing the recent market decline as merely sentiment-driven.
“The market fall and the potential for a rebound at the end of a war will likely be a key area of investor scrutiny – but what no one knows is when the war ends. It is a binary call – and given the macro, earnings impact the market fall should not be characterised as just due to sentiment.”
The brokerage also outlined a bear-case scenario that remains a real risk if the conflict drags on and crude prices stay elevated for an extended period. In such a situation, the Nifty could see a much sharper correction, with levels potentially slipping below 20,000 and even testing 19,000.
Bernstein said such a downside scenario would likely coincide with a broader macro slowdown, tighter liquidity conditions and fresh pressure on market valuations.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.