Citi raised the target level of India's Nifty 50 index from 26,000 points to 28,000 points, citing positive profit prospects, declining oil price risks, and capital flows to non-AI assets after the US midterm elections. The broker delayed the target time window from September 2027 to December 2027, and raised the valuation multiplier from 17 times to 18 times. Citi expects the compound annual profit growth rate of Nifty index constituent stocks from fiscal year 2026 to fiscal year 2028, and the second-quarter earnings report will continue the growth trend of the first quarter. The decline in crude oil prices is expected to simultaneously benefit the macro environment and corporate profits. Citi estimates that for every $10 drop in oil prices, India's current account deficit can narrow by 30 to 40 basis points, inflation falls by about 50 basis points, and the earnings per share of the Nifty Index increase by about 2%. After the US midterm elections, the pace of investment in the AI sector has leveled off, which may drive capital rotation to non-AI assets, which will benefit the Indian stock market. Analysts Surendra Goyal and Vijit Jain wrote, “The AI sector has absorbed almost all of the money in the past two years. We estimate that an increase in India's allocation weight in the active portfolio by about 100 basis points could bring in about $12 billion in inflows; combined with domestic capital resilience, the market environment will be supported.”

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