By Pranoy Krishna and Vivek Mishra
BENGALURU (Reuters) -Pressured by U.S. tariffs and foreign investor outflows, India’s stock markets will manage to eke out only modest gains by year-end, according to a Reuters poll of equity analysts who have pushed back their forecast for a new record high to 2026.
Foreign investors have sold more than a net $13 billion of Indian stocks this year, including around $2.4 billion in the first half of August after U.S. President Donald Trump raised tariffs on Indian exports to 50% – among the steepest imposed on any U.S. trading partner.
The 5.2% rise in the blue-chip Nifty 50 index so far this year lags broader Asian and emerging markets, which have gained 17.2% and 18.2%, respectively. If the trend continues it would be the first time in five years that the Nifty underperformed those indices.
The Nifty 50 is forecast to rise about 3.9% to 25,834 by the end of this year, before reaching 26,500 by mid-2026 and 27,950 by end-2026, according to an August 8-20 poll of 20 equity analysts. Those forecasts are lower than in the previous quarterly survey, with a new record high now not seen until 2026.
The BSE Sensex is seen climbing to 85,100 this year, 86,875 by mid-2026 and 91,370 by end-2026.
“Until foreign investors are confident in the Indian economy and earnings…I don’t think we’ll see a substantial rise from here. The danger is they will use every rise to dump their stocks,” said Yogesh Kalinge, associate director of research at A.K. Capital Services.
“Trump keeps firing tariff volleys, the wind changes every week and honestly it’s just hope and speculation keeping this market afloat.”
Around a third of analysts who usually take part in the poll did not provide forecasts this quarter, with some saying the market has become increasingly difficult to predict.
Rajat Agarwal, Asia equity strategist at Societe Generale, who did participate, said weak economic data, tariff uncertainty and tepid earnings meant foreign inflows may take time to return.
While India is the world’s fastest-growing major economy, expected to expand 6.4% this fiscal year, its listed companies have reported only single-digit profit growth for five straight quarters. That is a sharp slowdown from the 15-25% expansion recorded between 2020-21 and 2023-24, a period over which the Nifty 50 rose around 160%.
No major improvement is expected over the coming quarters. A majority of analysts, 16 of 21, said corporate earnings in the Indian stock market would edge up only marginally in the second half of 2025 from the first half, while two expected a significant increase.
An expected cut to the goods and services tax (GST) in October to boost household consumption may also help shore up earnings, although analysts say the full impact will take time to filter through the economy.
Valuations remain a concern. India’s Sensex trades at 23 times forward earnings, among the world’s highest, nearly matching Wall Street’s S&P 500, LSEG data showed.
HDFC Securities senior derivative analyst Subash Gangadharan said the GST cut was a positive step but would have limited impact given already sky-high valuations, and predicted the Nifty 50 to fall to 22,000 by end-2025.
(Other stories from the Reuters Q3 global stock markets poll package)
(Reporting by Pranoy Krishna and Vivek Mishra; Polling by Vijayalakshmi Srinivasan and Veronica Khongwir; Editing by Hari Kishan, Ross Finley, Kirsten Donovan)
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