As the Iran war completed its second month on April 28, 2026, brokerages have begun recalibrating their stance on Indian equities, turning more cautious amid persistent geopolitical uncertainty and elevated crude oil prices.
Bloomberg data shows that the average
Nifty target has slipped 3.8 per cent — from 29,899.31 before the conflict (February 28) to 28,747.98 now. This still implies a 12-month upside of 20 per cent from Tuesday’s closing level.
The moderation in Nifty targets, analysts said, reflects macroeconomic risks for an oil-import-dependent economy like India. They reasoned that the prolonged disruption around the Strait of Hormuz has kept energy prices elevated, triggering concerns around inflation, growth, and corporate earnings.
“The war-driven environment has weighed on the return outlook for 2026, leading to an 8-10 per cent cut in market forecasts as higher inflation pressures demand and profitability,” said Vinod Nair, head of research at Geojit Investments.
Among individual brokerages, Goldman Sachs has downgraded Indian markets to “Market-weight”, highlighting a “deteriorating macro mix” for India.
The brokerage noted that higher-for-longer energy prices have led to a downgrade in gross domestic product (GDP) growth forecasts by 1.1 percentage points to 5.9 per cent, alongside a 70-basis-point increase in inflation expectations.
Echoing similar concerns, HSBC has downgraded Indian equities to “Underweight”, while JPMorgan has downgraded the pack to “Neutral”.
“India’s premium to MSCI Emerging Markets index has compressed to 65 per cent (from a 109 per cent peak), reflecting some re-rating, but peers like Korea, Brazil and China still offer cheaper entry points for similar or better forward growth,” JPMorgan said.
The brokerage has revised its year-end Nifty50 targets to 30,000 (bull case), 27,000 (base case), and 20,500 (bear case).
Back home, Emkay Global said that the market rally in April suggests investors may have underestimated the stickiness in crude oil prices.
However, with Brent hovering above $100 per barrel, a likely fuel price hike could trigger a near-term correction, it said.
That apart, inflation and El-Nino can cast shadow on the same in coming quarters, analysts warned.
Selective optimism persists
That said, some brokerages remain constructive on India’s medium-term outlook, citing resilient domestic fundamentals and easing valuations.
Morgan Stanley, for instance, highlighted improving earnings momentum, strong policy support, and attractive relative valuations, projecting the Sensex to reach 95,000 by December 2026 in its base case.
HDFC Securities also sees scope for recovery, noting that markets are nearing the end of an 18-month correction cycle. The brokerage expects the Nifty to reclaim record highs, supported by robust GDP growth of around 6.5 per cent and improving risk-reward dynamics as valuations moderate.
Investment strategy for Indian stock markets
Given the evolving macro backdrop, brokerages are advising a more selective and defensive investment approach amid easing valuations and value-buying opportunities.
Goldman Sachs prefers sectors with lower sensitivity to oil shocks, such as financials, staples, and telecom, while maintaining a positive stance on defence and energy as structural themes. It remains cautious on cyclicals like autos, durables, and NBFCs.
PL Capital has increased exposure to banks, capital goods, metals, and telecom, while turning underweight on consumer and auto stocks due to the second-order impact of inflation. It continues to see long-term opportunities in sectors such as defence, renewables, data centres, and manufacturing.
JPMorgan also favours financials, materials, consumer discretionary, hospitals, defence, and power, while staying underweight on IT and pharma.
Meanwhile, HDFC Securities recommends power, infrastructure, and BFSI sectors.
