Mumbai — Bank of America Securities has turned more positive on Indian equities, forecasting that the Nifty could rise to 26,200 by December 2026, representing an upside of about 12 percent from current levels.
In its latest strategy report, BofA said it had maintained a cautious stance on Indian stocks since August 2024 after identifying eight major risks that could keep the market volatile.
The brokerage said five of those risks have either already materialized or are now largely priced into the market, prompting it to adopt a more constructive outlook.
BofA said the three remaining risks could lead to about 7 percent downside for the Nifty 50 in its bear-case scenario. In its base case, however, it expects the index to reach 26,200 by December 2026.
The brokerage expects the remaining risks to peak by October 2026, potentially creating room for a more sustained market recovery beginning in November.
One of the risks previously identified was a sharp increase in crude oil prices above $100 a barrel, compared with BofA’s fourth-quarter 2026 estimate of $81 a barrel. The brokerage noted that crude prices have retreated from the $100-a-barrel level seven times over the past seven months.
The rupee was another concern, although BofA said recent inflows of about $136 billion should provide support to the currency and maintained an appreciation bias.
Weak monsoon conditions were also among the risks, with the current rainfall deficit at 13 percent, close to the 15 percent worst-case scenario previously projected by the brokerage.
BofA also expects limited further increases in aluminum and copper prices.
On monetary policy, its economist expects the Reserve Bank of India to raise the policy rate by 25 basis points by December 2026, compared with about 45 basis points currently priced into swap markets.
The three remaining risks include a possible surge in primary market issuances, with about $30 billion expected between September and December and activity likely to peak in October.
BofA also flagged the possibility of 75 basis points of Federal Reserve rate hikes, compared with about 35 basis points currently priced by markets.
Over the longer term, the brokerage said artificial intelligence-related disruption could pose risks to employment in India. (Source: IANS)
