New Delhi [India], January 8 : The Nifty 50 index is expected to deliver only around 7.6 per cent returns by the end of 2026 as India enters the year as one of the most expensive equity markets globally, according to a report by Bernstein.
The report said that even after assuming steady earnings growth, returns from Indian equities are likely to remain modest due to high valuations. Bernstein highlighted that while 2025 was a moderate year for earnings, its estimates still point to limited upside for the benchmark index in 2026.
It stated "we reach our Nifty target of 28,100 by the end of 2026 - which is a modest 7.6 per cent returns in the year"
According to the report, assuming a 13.5 per cent earnings compound annual growth rate (CAGR) up to FY28 and applying a 19 times multiple on two-year forward earnings per share (EPS), the Nifty 50 target comes to 28,100. This implies a return of around 7.6/7.5 per cent, which Bernstein described as modest.
Based on this outlook and its focus on absolute returns, the brokerage said it has cut its stance on India to "neutral".
At the end of 2025, with the Nifty at 26,150, the index was trading at 20.4 times one-year forward earnings. Bernstein assumed a 15 per cent EPS growth for 2026/FY27, after adjusting for exceptional items, and 12 per cent growth for the following year.
Based on these assumptions and a 19 times two-year forward P/E, the Nifty target of 28,100 by the end of 2026 implies returns of about 7.6 per cent, much lower than the 11 per cent returns seen in 2025.
Bernstein noted that India is entering 2026 as one of the most expensive markets globally, trading at over 20 times forward price-to-earnings (P/E). This is significantly higher than the average P/E of 15.1 times across 15 key global economies tracked by the firm.
The report added that markets have now entered a phase of heavier valuations, which in the past has rewarded cheaper markets more than expensive ones.
On the downside, the report said risks appear balanced. If EPS growth slows to 8 per cent in each of the next two years and the valuation multiple falls to 18.5 times, the Nifty target could drop to 24,800, implying a 5 per cent decline from current levels.
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