Nomura slashes Nifty target by 15% amid US-Iran war
What's the story
Leading brokerage firm Nomura has revised its Nifty 50 target for December 2026, slashing it by a whopping 15% to 24,900. The previous target was set at a much higher level of 29,300. The revision comes in the wake of the ongoing West Asia war between US-Israel and Iran, and its potential impact on consensus earnings estimates.
Earnings forecast
Earnings estimates at risk due to ongoing geopolitical tensions
In a note released today Nomura warned that there is a risk of 10% to 15% to consensus earnings estimates for the financial year 2027. This is if oil prices remain at their current elevated levels. The firm's base case assumes a reduction of 7.5% in these estimates and trims the price-to-earnings multiple from its previous level of 21x to 18.5x now.
Market outlook
Target range and recent market correction
Nomura has pegged its December 2026 target in a wide range of 21,000-29,100. The bull case assumes an immediate de-escalation of geopolitical tensions. However, the firm also predicts that Indian equities have already corrected by 8% over the past two weeks with both Nifty and Nifty Bank down by 13% each from their respective record highs.
Correction forecast
Near-term correction and long-term buying opportunity
Nomura has predicted an additional 5% correction in the near-term, with small and mid-cap stocks being at a relatively greater risk. The firm also warned that adverse flows from foreign institutional investors (FIIs) could drive markets even lower in the short-term. However, it added that a correction beyond 5% from current levels should be seen as a long-term buying opportunity.
Sector performance
Sectors expected to outperform in current scenario
Despite the predicted market correction, Nomura expects certain sectors to outperform. These include utilities, coal, oil producers, healthcare, pharma consumer staples and telecom. "Fundamentally, we are constructive on these sectors, except for healthcare services and staples, where we find valuations to be demanding," Nomura said.