Emkay Global sets Nifty target at 29,000 in CY2026E; cites consumption recovery, monetary easing as key growth catalysts by Emkay Global Financial Service
Emkay Global Financial Services expects Nifty to reach 29,000 in CY2026E, supported by a recovery in discretionary consumption in H2FY26, easing liquidity infusion by RBI, mixed capex cycle, and expectations of an India-US trade deal. In a webinar on India Strategy 2026 outlook, Emkay Global has set Nifty projection for CY2026E of 29,000 with expectations of valuations continuing to remain elevated.
According to Emkay Global, the GST reforms and structural boost to affordability will help revive consumption and the economy while RBI’s ‘Do what it takes approach’ will lead to a revival of retail lending. While cautioning that near-term volatility may persist, Emkay Global notes that the combination of GST-driven consumption momentum, a softer rate environment and stable policy direction provides a favourable setup for India’s medium-term growth cycle. It expects healthy rainfall to aid income and consumption recovery, supported by an additional tailwind from FY26 Union Budget tax cuts.
According to Nirav Sheth, CEO - Institutional Equities, Emkay Global, “India’s medium-term outlook remains remarkably resilient. Despite near-term volatility, the alignment of softer rates, improving consumption and stable policy direction creates a strong foundation for the country’s multi-year growth cycle, positioning the Nifty for meaningful upside through 2026.”
The 2026 outlook also factors in the RBI’s liquidity infusion which is expected to reduce borrowing costs and aid credit transmission, particularly for retail-focused lenders and NBFCs. While corporate capex remains moderate, government-related spending in railways, defence and power continues to provide visibility. On flows, Emkay Global notes that domestic mutual fund inflows continue to remain robust, even as FPIs have remained net sellers with outflows of Rs 271 billion year-to-date. Meanwhile, the primary market remains active, with total issuances reaching Rs 1,769 billion so far this year. It highlights that although large-caps provide wealth protection in volatile markets, SMIDs provide alpha.
Seshadri Sen, Head of Research & Strategist, Emkay Global notes, “SMID valuations may appear elevated at first glance, but they remain largely justified given the significant differences in sector composition. Unlike the Nifty which has a much larger share of low-P/E sectors like Financials and Energy, the SMID universe focuses more toward higher-growth businesses, which naturally command richer valuations. Within segment, we’re also seeing better earnings quality coming through, especially in sectors like Consumer Discretionary, where meaningful opportunities are emerging. On the other hand, we remain underweight on areas dominated by large caps, such as Financials and FMCG.”
Sectoral Outlook for 2026:
Emkay’s sector stance for 2026 is Overweight on Discretionary, Industrials, Healthcare and Materials, driven by improving demand patterns and structural earnings visibility. It notes that discretionary is the strongest theme, supported by GST-linked price cuts, urban demand recovery and early signs of improvement in hiring trends.
The firm remains Underweight on Financials, Staples, IT and Telecom. It notes that financials face continued de-rating pressures for large banks and intensifying competition from PSU lenders and NBFCs. On the other hand, IT sector, despite being more reasonably valued, is expected to see a sustained recovery by CY26 as global tech spending stabilises.
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