Kotak Securities is seeing a 13% upside from the current level for the Nifty 50 and expects it to hit 29,120 level by December 2026 in its base case scenario. The brokerage also sees various tailwinds for gold and silver even after a stellar rally in 2025.
“We hold a favourable view of the Indian market compared to our earlier stance, as the earnings outlook has strengthened amid resolute government action. Moreover, some of our earlier concerns—particularly around high valuations and the risk of earnings downgrades—have already played out to a meaningful extent over the last 12–15 months, reducing downside risks and improving the overall market setup,” it said in a report.
Earnings Recovery and Sector Preferences
While Kotak expects only a moderate pick-up in earnings in FY26E, it sees a strong recovery in the net profits of the Nifty-50 Index in FY27E, supported by improving fundamentals and a relatively improving macro backdrop. Its preferred sectors include BFSI, Information Technology, healthcare, and hospitality. Its Head of Equity Research Shrikant Chouhan said on Wednesday, “Right now, we are not expecting flow reversal from foreign investors, changes in global markets can actually reverse flows from the US to India.”
The report said one-year return of the Indian market has been quite mediocre, though the three-year performance remains very strong. “Primary market activity continues to attract robust interest from both institutional and retail investors, reflected in the large number of new listings on the main exchanges,” it said.
Chouhan said in 2024 and 2025, the primary market — IPO and QIP issuances — has sucked a lot of liquidity. In addition, in 2025 till November, we saw outflows close to $25 billion. The market is finding it difficult to sustain at higher levels because a lot of inflows are diverting towards the IPO market, he said, noting that IPOs have seen higher share of OFS versus fresh capital issue due to which flows go directly to the pocket of the promoters.
In its bull case scenario which values Nifty at 10% premium (at 22.0x) to 10-year average PE of 20.0x on FY28E EPS of Rs 1,456, it arrived at December 2026 Nifty target of 32032. In the bear case, where it values NIFTY at 10% discount (at 18.0x) to 10-year average PE of 20.0x on FY28E EPS of Rs 1,456, its target is 26,208.
Positive Tailwinds for Gold and Silver in 2026
Gold, the brokerage believes, has entered a cooling phase after an extraordinary run as it fell nearly $500 from its all-time highs as market become more cautions and try to evaluate how much of the 2025 narrative — Fed cuts, fiscal strain, geopolitical hedging, and central-bank demand — is already reflected in prices.
“Looking ahead, gold’s medium to long-term fundamentals remain positive as the U.S. fiscal position continues to deteriorate, with rising debt-service costs likely pushing policymakers toward forms of implicit financial repression that keep real rates structurally low — a historical tailwind for gold. Ongoing currency debasement risks and diversification away from fiat assets support sustained strategic buying by investors and central banks,” it said.
Silver’s 2026 outlook is also broadly positive, according to the broker as it is projected to benefit from monetary easing as the Federal Reserve is expected to initiate multiple rate cuts through the year, reducing real yields and weakening the dollar—trends that typically favor precious metals.
“Industrial demand is likely to recover as key end-uses expand, led by double-digit growth in photovoltaic deployment, a rapid build-out of EV charging networks, improving battery technologies, and widening semiconductor applications driven by advanced computing and artificial intelligence,” it said.