Mumbai, Sep 14 (IANS): The Nifty could climb to 26,200 by December 2026, implying an upside of around 12 per cent from current levels, as Bank of America (BofA) Securities has turned constructive on Indian equities after maintaining a cautious stance for nearly two years.
In its latest strategy report, BofA said it had remained cautious on Indian stocks since August 2024 and had identified eight key risks that could keep the market volatile. However, five of those risks have either already played out or have been largely priced into the market, prompting the brokerage to adopt a more positive stance.
BofA said the three remaining risks could create around 7 per cent downside for the Nifty 50 in its bear-case scenario. In its base case, however, the brokerage sees the index reaching 26,200 by December 2026.
According to BofA, the remaining risks are expected to peak by October 2026, potentially creating room for a sustained market recovery from November.
One of the key risks identified earlier was a sharp rise in crude oil prices above $100 a barrel, compared with BofA’s fourth-quarter 2026 estimate of $81 a barrel. The brokerage noted that crude prices have reversed from the $100-a-barrel level seven times over the past seven months.
The rupee was another concern, although BofA said recent inflows of around $136 billion should provide support to the currency and maintained an appreciation bias.
Weak monsoon conditions were also among the risks, with the current rainfall deficit at 13 per cent, close to the 15 per cent worst-case scenario previously projected by the brokerage.
BofA also expects limited further acceleration in aluminium and copper prices. On monetary policy, its economist expects the Reserve Bank of India to raise the policy rate by 25 basis points by December 2026, compared with around 45 basis points currently priced by swap markets.
The three remaining risks include a possible surge in primary market issuances, with around $30 billion expected between September and December and issuance activity likely to peak in October. Another risk is the possibility of 75 basis points of Federal Reserve rate hikes, compared with around 35 basis points currently priced by markets. Over the longer term, BofA also flagged the potential impact of artificial intelligence-led disruption on employment in India.
