Goldman Sachs India 2025 Outlook: Goldman Sachs has shared its strategic outlook for Indian equities in 2025, highlighting significant growth potential in sectors such as housing, agriculture, defence, tourism, and the rapidly expanding affluent consumer market. According to the firm, these areas are expected to drive India’s next phase of economic expansion.
Stock Market Outlook
However, Goldman Sachs analysts are cautious about the near-term outlook for Indian equities. They foresee weak earnings growth and high valuations, which could result in a range-bound market over the next three months.
In the short term, Goldman Sachs predicts that the Nifty50 index will reach 24,000 (a 2 per cent increase) over the next three months, with a more substantial recovery expected later. Underlying earnings growth will drive the 12-month target for the index to 27,000.
“While the MSCI India index has seen an 8 per cent valuation de-rating, it still trades at nearly 23-times forward price-to-earnings (PE), well above the 10-year average and our fair-value estimate of 21-times PE. We forecast MSCI India earnings growth of 12 per cent, 13 per cent, and 16 per cent for CY 2024, 2025, and 2026, respectively—slightly below consensus estimates,” Goldman Sachs said.
In a comprehensive report by Sunil Koul, Amrita Goel, and a team of 12 analysts, Goldman Sachs presented its medium-term outlook for India. The report highlights the resilience of “quality factors” during periods of economic slowdown. Historically, companies with strong balance sheets, high earnings visibility, positive earnings-per-share (EPS) revisions, and low volatility (low beta stocks) have consistently outperformed in challenging economic conditions.
“Our preferred medium-term themes include housing, agriculture, defence, tourism, and affluent India,” analysts at Goldman Sachs stated.
These sectors align with the key structural trends reshaping India’s economy, including urbanisation, agricultural reforms, growing national security needs, and a burgeoning middle class eager to travel and invest in premium products.
Oversold Stocks
The analysts also highlighted a list of 16 ‘oversold’ stocks, each having experienced a correction of over 20 per cent. The stocks identified include Trent Limited, InterGlobe Aviation, Shriram Finance, Havells India, Cholamandalam Investment, IndusInd Bank, Aurobindo Pharma, Phoenix Mills, AU Small Finance Bank, L&T Finance, Emami, Star Health & Allied Insurance, Crompton Greaves Consumer, Kajaria Ceramics, C E Info Systems, and CreditAccess Grameen. The analysts view these as significant buying opportunities in the current market.
Goldman Sachs maintains a tactically neutral stance on Indian equities within its Asia/EM 2025 allocations but strategically focuses on select domestic and export-oriented sectors. Domestically, the firm targets sectors such as autos, telecom, insurance, real estate, and internet companies, all offering higher earnings visibility.
On the export front, Goldman Sachs has upgraded the IT sector to overweight (OW) and the pharmaceutical sector to market weight (MW), citing benefits from stable or improving global demand, earnings-per-share (EPS) growth driven by a weaker Rupee (INR), and the defensive nature of these industries.
While India’s medium-term growth outlook remains strong, cyclical challenges and high valuations suggest a cautious approach in the near term. By focusing on carefully selected domestic and export sectors, Goldman Sachs advises investors to navigate current market conditions strategically while positioning themselves for long-term growth.
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