Nomura, Citi slash year-end Nifty 50 target

For India, the impact is likely to be magnified as the SoH accounts for 43 per cent and 63 per cent of the country's crude oil and LNG imports.

Foreign brokerages have started to cut their year-end targets for the Nifty 50 index amid the ongoing West Asia conflict.

Nomura now sees the Nifty 50 index at 24,900 levels, down 15 per cent versus its earlier target of 29,300, but around 6.4 per cent higher from Monday’s close.

It also sees up to a 10-15 per cent risk to consensus earnings estimates for FY27F (forecasts) if oil prices remain elevated.

“Our base case assumes a 7.5 per cent reduction in consensus earnings estimates, with the price-to-earnings (P/E) multiple at 18.5x (earlier 21x).

"We see December Nifty target in the range of 21,000-29,100, with our bull-case assuming an immediate de-escalation of geopolitical tensions,” wrote Saion Mukherjee, head of India equity research at Nomura in a recent note.

Those at Citi Research, too, have cut their 2026-end Nifty target by 5.2 per cent to 27,000 amid the ongoing West Asia tension.

“While India's fiscal and monetary response hinges on the conflict's duration and severity, the earnings impact is a function of how prolonged the supply shutdown is,” analysts led by Surendra Goyal of Citi Research said on Monday.

Buy or sell?

Nomura believes an additional 5 per cent correction (similar to the correction during the Russia-Ukraine war) is a distinct possibility in the near term, with small and midcap stocks at relatively greater risk.

“A correction beyond 5 per cent from current levels should present a buying opportunity from a long-term perspective,” Mukherjee wrote.

Through this phase of market correction, Nomura expects coal, oil producers, healthcare, pharma, staples, and telecom sectors to outperform.

While the research and brokerage house remains constructive on these sectors, it finds valuations demanding in the healthcare and staples spaces.

Oil price shock

The revision in the Nifty target and the risk to corporate earnings, Nomura said, stems from the sharp rise in crude oil prices that have shot past the $100 per barrel (bbl) mark given the developments with the Strait of Hormuz (SoH), which accounts for 20-25 per cent of global trade in oil and LNG versus Russian supplies of around 8-10 per cent.

For India, the impact is likely to be magnified as the SoH accounts for 43 per cent and 63 per cent of the country's crude oil and LNG imports, respectively.

“Unlike the unprecedented closure of the SoH, the Russian supplies largely remained intact.

"Thus, investors are likely to be more concerned about the current situation as it is more disruptive to energy supplies and prices.

"There are no signs of the disruptions ending at the moment,” Nomura said.

A sustainably higher oil & gas price environment, Mukherjee said, will adversely impact a fledgling growth recovery, drive inflation higher and strain external balance.

“We estimate that for crude oil prices up to $90/bbl, the impact may largely be borne by oil companies and the government.

"Any incremental burden beyond this level will be passed on to consumers through higher fuel prices,” Nomura said.

Citi, on the other hand, has downgraded autos to ‘neutral’ from ‘overweight’ on risks emanating from a rise in oil & gas prices and potential semiconductor-related disruptions.

It has dropped Mahindra & Mahindra (M&M) from its top picks and Mahanagar Gas from its midcap top picks.