Global brokerage firm Goldman Sachs has released its latest India strategy note, outlining its outlook for the Indian equity markets.

The foreign brokerage expects the Nifty 50 index to reach the 27,000 mark by the end of 2025, supported by underlying earnings growth estimates of 13% and 16% over the next two years. The Nifty 50 has fallen 10% from the record high level of 26,277 that it had made on September 27, 2024.

According to Goldman Sachs’ note, the Indian markets will remain range-bound over the next three months, with a target of 24,000 for a back-loaded recovery, as growth picks up.

Goldman Sachs wrote in its note that the Indian stock markets currently have an external immunity; however, there is a cyclical slowdown in domestic growth. Therefore, weak earnings coupled with high valuations are expected to keep the markets range-bound in the near term.

The brokerage maintains a ‘tactically neutral’ stance on India, favoring medium-term investment themes including housing, agriculture, defense, tourism and affluent India.

Additionally, Goldman Sachs is optimistic about export-oriented sectors, upgrading Infotech to ‘Overweight’ and Pharma to ‘Market-weight’, citing an improvment in demand, coupled with earnings-per-share (EPS) tailwinds from a weaker rupee, and the defensive nature of these industries.

The foreign brokerage has highlighted four key “flavors” of quality in stocks it prefers: strong balance sheets, high earnings visibility, positive EPS revisions, and low-beta stocks.

Another brokerage house Citi said that Nifty valuations have become more reasonable, with the index’s one-year forward price-to-earnings (P/E) ratio now only slightly above its five-year long-term average.

Citi’s September 2025 target for the Nifty is 25,000.

Speaking at CNBC-TV18 Global Leadership Summit, market veteran Raamdeo Agrawal expects the Nifty index to hit 30,000 when the FIIs come back to Indian markets.

“Earnings are slowing down, so there is a clear challenge for the earnings to come back. Maybe it would take 6 months for the earnings to come back, but they will come. We need fiscal or monetary help. And it will come. Have patience and wait. Foreigners are getting out today. But when they come back to buy, they won’t get the same prices. Maybe when they come back, the Nifty index will be 30,000. Foreign investors who exit India may not find a similarly competitive price to make an entry elsewhere,” Agrawal said.

The Indian equities have corrected more than 10% from its record high of 26,277. Broader markets too have seen a similar correction with the Midcap and Smallcap index declining between 12% to 13% from their respective peaks.

Sectoral indices including Nifty Auto, Nifty FMCG, Nifty PSU Bank index are down between 15% and 20% from their respective peaks.