Nifty at 26,000? Citigroup sees 10% upside for Indian stocks in 2025; here’s why

Citigroup Inc. is anticipating a 10th straight year of gains for India’s $5 trillion stock market, driven by a recovery in economic growth as well as robust corporate earnings.

The brokerage has set a target of 26,000 for the benchmark NSE Nifty 50 index, implying a 10% return from its Dec. 31 close. The gauge ended 2024 about 5% above the Wall Street bank’s forecast of 22,500. 

“India’s EPS growth outlook remains robust and relatively low risk given the diversified universe of listed companies,” strategists including Surendra Goyal wrote in a note. “With some policy support the economy could return to a ~6.5% growth path in 2025, though a robust private investment recovery could remain elusive.” 

Citi joins Morgan Stanley in predicting double-digit returns for the Indian market. Morgan Stanley sees India’s other benchmark, the BSE Sensex, rising 18% in 2025, as retail buying stays ahead of supply of new shares, the brokerage said last week.

Individual investors snapped up 1.5 trillion rupees worth of stocks on the National Stock Exchange of India Ltd. in 2024, set for a record. Market participants expect robust domestic flows to remain a buffer against the still-weak urban demand, a slumping currency and rising global yields. 

Domestic flows have remained “robust” and retail investors have consistently “bought the dips”, Citi’s Goyal said, as he anticipates inflows from global funds to be affected by the dollar’s surge.