BofA Securities has turned constructive on Indian equities after nearly two years of caution, setting a December 2026 Nifty target of 26,200, according to Arbind Maheswari, Head of India Equities at BofA Securities. The brokerage expects the Nifty to rise to 26,200 by December 2026, implying about 15-16% upside from current levels. As reported by CNBC TV18, Maheswari said the combination of improving earnings and lower valuations has made BofA more positive on Indian equities. The brokerage now expects 18% earnings growth in the September quarter after 12% growth in the previous quarter, with current forecasts of 10% earnings growth for the financial year 2026-27 (FY27) and 15% for 2027-28 (FY28). Maheswari emphasized that "We are constructive now on the Nifty after almost two years of being cautious."
BofA now sees 10-15% earnings growth this fiscal year and believes there is upside risk to its estimates after the September quarter. The brokerage expects 18% earnings growth in the September quarter after 12% growth in the previous quarter. According to the report, BofA currently forecasts 10% earnings growth for the financial year 2026-27 (FY27) and 15% for 2027-28 (FY28), though Maheswari said there is potential for earnings estimates to be revised higher after the current reporting season. The brokerage expects Indian companies to deliver stronger earnings over the coming quarters despite concerns around crude oil prices, inflation and global uncertainty. As per the latest reports, BofA believes there is upside risk to its earnings estimates after the September quarter performance.
Maheswari noted that the Nifty is trading at around 17-17.5 times earnings, close to one standard deviation below its historical average. As reported by CNBC TV18, this valuation correction has prompted BofA to upgrade its market stance after remaining cautious for nearly two years. The brokerage believes the combination of improving earnings expectations and lower valuations has made it more positive on Indian equities. According to the latest reports, valuations have corrected to levels that support a more constructive view on Indian equities, with the Nifty trading at attractive multiples relative to historical averages. Maheswari stressed that "valuations have corrected to levels that support a more constructive view on Indian equities."
Maheswari explained that foreign investors are selling Indian equities largely because capital is flowing towards global artificial intelligence (AI) opportunities rather than because of concerns over India's economy. According to the report, investors globally are concentrating capital in AI-related companies, particularly in the US, while sectors outside the AI ecosystem have struggled to attract flows. He stressed that India's economic fundamentals remain intact despite global headwinds, stating there is nothing wrong with the Indian economy and it has been as resilient as seen. The brokerage believes foreign portfolio outflows should not be interpreted as a sign of weakening confidence in India, but rather reflects global investors' allocation to AI-driven opportunities where returns have been stronger. As per the latest reports, Maheswari emphasized that "foreign investors are selling Indian equities largely because capital is flowing towards global artificial intelligence (AI) opportunities rather than because of concerns over India's economy."
According to Maheswari, high-frequency indicators continue to point to healthy economic activity despite global uncertainties. Government capital expenditure remains strong, tax collections have been robust and credit growth continues to hold up despite pressure from higher crude prices, interest rates, currency movements and a weaker monsoon. BofA expects another 100 basis points of RBI rate hikes over the next six to nine months, following the Reserve Bank of India's recent 25-basis-point rate increase. The brokerage notes that India continues to attract investment in emerging sectors that receive less attention in listed markets, including data centers, AI infrastructure, manufacturing, defence and nuclear energy. These investments should support long-term growth and economic activity over time. As per the latest reports, Maheswari noted that "there is nothing wrong with the Indian economy. It's been as resilient as we have seen."
