Citi Becomes Optimistic on India, Forecasts Nifty to Reach 26,000 by December
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Synopsis
Citi has upgraded its outlook for India's markets, predicting that the Nifty 50 index could rise to 26,000 by December, reflecting a 15 percent potential gain. This optimism is supported by tax cuts, increased government spending, and expected monetary policy easing.
Key Takeaways
- Citi projects Nifty 50 index to reach 26,000 by December.
- Upgrade from 'Neutral' to 'Overweight' for Indian markets.
- Tax cuts expected to boost consumer spending.
- Recovery in public capital expenditure noted.
- Further easing of monetary policy anticipated.
Mumbai, Feb 24 (NationPress) Global brokerage firm Citi announced on Monday that it anticipates the Nifty 50 index reaching 26,000 by December of this year, representing a potential 15 percent increase from current levels.
The brokerage has also raised India's market outlook from 'Neutral' to 'Overweight,' highlighting strong growth potential, appealing valuations, and improving consumption trends.
In its most recent research report, Citi identified that Indian equities present a 'meaningful upside' due to 'less demanding' valuations. The report outlines three principal factors influencing this positive perspective on India.
The first factor is the recent tax reductions introduced in the Union Budget for FY26, which are projected to enhance consumer spending and stimulate demand.
The second factor is the recovery in public capital expenditure, with evidence showing robust government investment in infrastructure and growth initiatives.
Finally, the brokerage foresees further easing in monetary policy, with the Reserve Bank of India (RBI) having already reduced rates by 25 basis points, and Citi predicting an additional 50 basis points cut in the near future.
The firm views the country’s predominantly domestic-driven economy as a significant advantage, positioning it well to navigate global uncertainties, including apprehensions related to US tariff policies.
This upgrade occurs as domestic benchmark indices experience ongoing pressure.
In the past five trading sessions, the Sensex has declined by 1,542 points, or 2 percent, while the Nifty has dropped by 406 points, or 1.76 percent.
Despite this downturn, Citi remains hopeful regarding India’s medium-term growth outlook.
Recent announcements of new reciprocal tariffs by US President Donald Trump have rattled global markets, raising concerns about trade tensions.
However, Citi observed that Indian companies have limited exposure to trade with the US and China, which mitigates risks associated with these policy changes.
