Niftytarget at 5,700, saying the macro outlook remains challenged which coupled with tighter financial conditions may lead to lower valuations.
The investment bank says India's corporate health, and asset quality of banks will remain under pressure while positioning risk and election uncertainties are likely to linger as well.
Also, the bank adds that major emerging market/Asia active managers are still overweight on India by 3-4 percentage points and so any meaningful retail redemptions or decrease in allocations could put pressure on equities.
"Every 1 pp (percentage point) decrease in India OW allocations could translate to net outflows of US$3.5 billion, as per our estimates," Goldman Sachs said in a report on Tuesday.
Goldman continues to like exporters over domestic-demand oriented sectors, citing improving external growth.