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Citi Cuts Nifty 50 Target Amid Global AI, Geopolitical Fears
11 Jun
Summary
- Citi lowered Nifty 50 target to 26,000 due to geopolitical tensions.
- India's AI ecosystem role and earnings growth risks are concerns.
- Foreign investor allocation to India at a five-year low.
Global brokerage Citi has revised its Nifty 50 index target downwards to 26,000 from 27,000. This adjustment stems from ongoing geopolitical tensions, potential risks to corporate earnings growth, and India's current limited role in the global artificial intelligence (AI) infrastructure.
The brokerage, using a valuation framework based on March 2028 earnings, now sees the index at 18 times forward earnings. While maintaining a constructive medium-term outlook for India, Citi notes that near-term headwinds could continue to impact foreign investor sentiment and market performance.
Foreign portfolio investor (FPI) participation in Indian equities has significantly weakened, with India's allocation in global emerging market funds reaching a near five-year low. This subdued sentiment is attributed to geopolitical conflicts, climate-related risks, and the rapid evolution of AI investment themes worldwide.
Citi also highlighted a moderation in corporate earnings growth, with aggregate EBITDA growth for BSE100 companies at approximately 6 percent year-on-year in the March quarter. Despite foreign selling, resilient domestic investor flows are seen as a key support for the market, with Indian equity valuations now appearing more reasonable compared to other markets.
