Citi is bullish on the Indian stock market, expecting the Nifty Index to rise to 28,000 points by the end of 2027.

Reuters, November 9 - Investment bank Citi Research expects India's benchmark stock index Nifty 50 (.NSEI) to rise to 28,000 points by the end of 2027, citing strong earnings prospects, lower oil prices, and anticipated slower growth in artificial intelligence (AI) capital expenditure as favorable factors for the stock market of Asia’s third-largest economy.

This target implies an upside of about 12% from the Nifty 50 index’s recent closing at 24,986.4 points.

Until recently, India’s stock market had underperformed its global peers, as the AI trading frenzy and persistently high oil prices put pressure on the economic outlook of this world’s third-largest crude oil importer.

Citi’s bullish outlook comes as the benchmark Nifty 50 index surged more than 10% over seven trading sessions through last Friday, helped by the return of foreign institutional investors (FPIs), unwinding of AI-related trades, and a fall in oil prices.

“In the past two years, AI has squeezed out almost every other investment theme. Our analysis suggests that a roughly 100 basis point increase in the weight of Indian stocks in portfolios could result in a capital inflow of about $12 billion,” Citi said in its India equity strategy report released on November 8.

After the Democratic Party's victory in the US midterm elections, market confidence in Indian equities has improved, boosting expectations of slower AI capital expenditure and lower oil prices, while the market is also hoping for an end to the conflict involving Iran.

“After the US midterm elections, the risk of accelerated data center construction pausing has triggered a rotation of funds towards other assets, and this trend could continue to benefit India,” Citi said.

As of November, foreign institutional investors (FPIs) have bought more than $4.1 billion worth of Indian stocks, marking the largest net monthly capital inflow since September 2024.

Citi raised the Nifty 50’s price-to-earnings ratio from 17x to 18x, resulting in a target level of 28,000 points. Previously, the bank projected the 50-stock index would reach 26,000 points by September 2027.

“Lower oil prices could help improve India’s macro environment and earnings expectations. Every $10-a-barrel drop in oil prices could narrow the current account deficit by 30–40 basis points, and decrease the inflation rate by 50 basis points,” the broker said.

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