Citi Research has raised its outlook for the Indian stock market, projecting that the Nifty 50 index could reach 28,000 by December 2027. The international brokerage firm expects improved corporate earnings, lower crude oil prices and increased foreign investment to support the market.
At the time the report was prepared, the Nifty was trading at around 25,000. Based on the revised target, the brokerage estimates a potential upside of approximately 12%. However, the projection represents Citi Research's market estimate and does not guarantee that the index will reach the target within the specified period.
According to Citi Research, earnings growth among Indian companies is expected to improve in the coming period. Lower international crude oil prices and a slowdown in investment momentum related to artificial intelligence (AI) could also benefit the Indian market.
In recent months, foreign investors have focused more heavily on major US technology and AI companies, limiting foreign investment in Indian equities. However, concerns over the valuations of AI-related companies and their rising expenditure could encourage investors to redirect capital towards other markets.
India could emerge as an alternative destination for these investors, supported by domestic demand, corporate earnings prospects and economic activity.
The Indian stock market has witnessed substantial buying activity in recent sessions. In the seven trading sessions through Friday, November 6, the Nifty 50 gained more than 10%.
The return of foreign portfolio investors (FPIs) has been identified as an important factor behind the rally. During the early days of November, foreign investors invested more than $4.1 billion in Indian equities. This represented the best monthly investment inflow since September 2024.
On Monday, November 9, the Nifty closed at 25,044.65. The recent market rally has coincided with increased investor participation. However, intermittent profit-booking remains possible following the sharp gains.
Citi Research identified crude oil prices as an important factor for the Indian economy. India meets a substantial portion of its oil requirements through imports, making the country's import expenditure sensitive to movements in international crude oil prices.
According to the report, a $10-per-barrel decline in crude oil prices could improve India's current account deficit by approximately 0.30 to 0.40 percentage points as a share of GDP. The inflation rate could also decline by approximately 0.50 percentage points.
Citi estimates that a decline of this magnitude in crude oil prices could increase the earnings per share of Nifty companies by approximately 2%. Lower operating costs could contribute to improved profitability for companies.
Citi Research has also outlined the potential impact of increased foreign investment in Indian equities.
According to the report, if large funds investing in emerging markets increase India's allocation in their portfolios by one percentage point, the Indian stock market could receive approximately $12 billion in additional investment.
The report also discusses the possibility of changes in global investment strategies following the US midterm elections.
A slowdown in expenditure on AI data centre projects could potentially benefit equity markets in other countries. However, foreign investment flows will also depend on global interest rates, the strength of the US dollar, international tensions and the financial results of Indian companies.
Citi Research had previously projected that the Nifty would reach 26,000 by September 2027. The brokerage has now extended the target timeline to December 2027 and raised its index projection to 28,000.
The brokerage has also increased its estimated price-to-earnings (P/E) multiple for the Nifty from 17 times to 18 times.
The report further projects annual corporate earnings growth of approximately 15% between FY2026 and FY2028.
While Citi Research's revised Nifty target outlines its expectations for the Indian equity market, the projection remains an estimate and does not establish a guaranteed market outcome.
