Goldman Sachs Sees Scope for FII Inflows to India, Projects Nifty 50 at 26,500 by June 2027

Foreign institutional investor (FII) selling in Indian equities is likely to have largely run its course, with room for overseas investors to increase exposure as India’s domestic outlook improves, Goldman Sachs said in its July India Strategy report. The global brokerage expects investor sentiment towards Indian equities to turn gradually more positive despite continued geopolitical uncertainties.

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Brokerage Expects Further Upside in Benchmark Index

Goldman Sachs has projected the Nifty 50 index to reach 26,500 by June 2027, implying an upside of around 10% from current levels. The report, authored by Timothy Moe, Co-Head of Asia Macro Research and Chief Asia-Pacific Equity Strategist, along with Amorita Goel and Sunil Koul, noted that improving domestic recovery could support equity markets even as tensions in West Asia keep global markets volatile.

The latest outlook marks a shift from the brokerage’s May 2026 stance, when it had described the risk-reward profile for Indian equities as less attractive than several North Asian markets and expected foreign investors to remain cautious.

Foreign Positioning Leaves Room for Fresh Inflows

According to Goldman Sachs, global investors used India as a funding market during the first half of 2026, resulting in record sales of nearly $30 billion worth of Indian equities over about three-and-a-half months. Since mid-June, however, overseas investors have turned net buyers, bringing in about $2 billion, with financial stocks accounting for a large share of the inflows.

The report said global funds continue to maintain underweight positions in Indian equities, leaving scope for additional allocations if visibility on domestic economic recovery improves.

FII Flows Show Mixed Trend in FY27

National Securities Depository Limited (NSDL) data showed that FIIs have recorded a net outflow of ₹1.28 lakh crore from Indian equities so far in FY27. During June, they withdrew ₹49,340 crore, while July has seen net investments of ₹15,157 crore.

Goldman Sachs noted that although earnings downgrades and relative valuations remain factors to monitor, improving domestic growth visibility could encourage investors to increase exposure ahead of a broader recovery.

Large-Caps, Value Stocks Preferred

The brokerage expects investors to rotate from growth-oriented stocks towards value opportunities as market conditions evolve. It said valuations of large-cap companies have moderated to levels close to their 15-year averages, while mid-cap stocks continue to trade at a premium to historical valuations.

Sectorally, Goldman Sachs has upgraded utilities to “overweight” while maintaining a positive view on banks, defence and tourism. It continues to prefer domestic-focused businesses over exporters and large-cap stocks over mid-caps. Among its preferred names for the second half of calendar year 2026 are Reliance Industries share price, HDFC Bank share price, NTPC share price, Power Grid share price, Hindustan Aeronautics share price, InterGlobe Aviation share price, Indian Hotels share price, Kotak Mahindra Bank share price and Adani Power share price.