 "Goldman Sachs sees Nifty at 27K in 2025, bets on housing, defence stocks")
Goldman Sachs’ India 2025 outlook: Goldman Sachs, the New York-based investment bank, has outlined its strategic vision for Indian equities in 2025. The firm identifies major growth potential in sectors such as housing, agriculture, defense, tourism, and the rapidly growing segment of affluent consumers, which it believes will drive the next phase of economic expansion in India.
That said, analysts at Goldman Sachs believe the near-term outlook for Indian equities remains cautious. Weak earnings growth and high valuations are likely to keep the market range-bound over the next three months.
As such, Goldman Sachs anticipates the Nifty50 index to hit 24,000 (+2 per cent) over the next three months, followed by a back-loaded recovery to a 12-month target of 27,000, fuelled by underlying earnings growth.
"While the MSCI India index has seen an 8 per cent valuation de-rating, it still trades at nearly 23-times forward price-to-earnings (PE), well above the 10-year average and our fair-value estimate of 21-times PE. We forecast MSCI India earnings growth of 12 per cent, 13 per cent, and 16 per cent for CY 2024, 2025, and 2026, respectively—slightly below consensus estimates," Goldman Sachs said.
India Stock Market Outlook 2025: Where to invest?
In a detailed note authored by Sunil Koul, Amrita Goel, and a team of 12 other analysts, Goldman Sachs laid out its medium-term outlook for India. The report stressed upon the resilience of ‘quality factors’ during periods of economic slowdown. Historically, companies with strong balance sheets, high earnings visibility, positive earnings-per-share (EPS) revisions, and low volatility (low beta stocks) have outperformed during challenging times.
“Our preferred medium-term themes include housing, agriculture, defense, tourism, and affluent India,” analysts at Goldman Sachs said. These sectors align with the structural trends reshaping India’s economy, from urbanisation and agricultural reforms to rising national security needs and a booming middle class eager to travel and invest in premium products.
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The analysts also flagged a selection of 16 ‘oversold’ stocks, each witnessing a correction of over 20 per cent. The stocks include Trent Limited, InterGlobe Aviation, Shriram Finance, Havells India, Cholamandalam Investment, IndusInd Bank, Aurobindo Pharma, Phoenix Mills, AU Small Finance Bank, L&T Finance, Emami, Star Health & Allied Insurance, Crompton Greaves Consumer Consumer, Kajaria Ceramics, C E Info Systems, and CreditAccess Grameen. These, they suggest, represent major buying opportunities in the current market.
Moreover, Goldman Sachs remains tactically neutral on Indian equities within its Asia/EM 2025 allocations but is strategically leaning towards select domestic and export-oriented sectors. Among domestic sectors, the focus is on autos, telecom, insurance, real estate, and internet companies, all of which demonstrate higher earnings visibility.
On the export front, the firm has upgraded the IT sector to overweight (OW) and the pharmaceutical sector to marketweight (MW), citing benefits from stable or improving global demand, earnings-per-share (EPS) tailwinds driven by a weaker Rupee (INR), and their defensive characteristics.
Although India’s medium-term growth outlook remains robust, cyclical challenges and high valuations call for a measured approach in the near term. By concentrating on carefully chosen domestic and export-oriented sectors, Goldman Sachs advises investors to navigate the current market dynamics strategically while positioning themselves to capitalise on long-term growth potential.