The spike in oil prices due to the halt of shipping traffic in the Strait of Hormuz and uncertainty from the war in West Asia has caused Indian benchmark indices to tumble. Nifty 50 has declined by 1,770 points or 7.03% since the start of the war in February 28, 2026 while BSE Sensex has declined by 5,784 points or 7.12%.
Citing concerns over rising oil prices and market uncertainty, brokerage houses Nomura and Citi revised their year-end estimates for Nifty 50. Nomura revised its December 2026 estimate by 15% from 29,300 to 24,900, while Citi Research reduced its estimate by 5.26% from 28,500 to 27,000.
While calling a further 5% correction in the near-term a ‘distinct possibility’, Nomura added that small and mid cap stocks are at relatively greater risk in the current market. A correction beyond 5% from current levels will also represent a long-term buying opportunity for investors.
Nomura’s expectations for Nifty
It expects Nifty 50 to be in the 21,000 – 29,100 range in December 2026, the latter number being a bull case scenario which assumes an immediate de-escalation of tensions. The earnings estimate (in the base case scenario) has been reduced by 7.5% from 21x to 18.5x.
In terms of impact of the war on macro-economic factors, Nomura expects an over $18 billion (0.5% of GDP) impact on trade deficit for every rise in price of oil by $10/barrel. While ruling out any possibility of monetary easing, it also raised the CPI forecast for FY27 from 3.8% to 4.5%.
In its sectoral outlook, the brokerage has expressed a bullish stance on sectors like financials, consumer discretionary/durables, manufacturing (electronic manufacturing services and auto ancillaries), cement, IT services, pharmaceutical and telecom, while having a bearish stance on sectors like consumer staples/FMCG, infrastructure, capital goods/defense, healthcare services and real estate.
Citi Research, besides cutting the year-end Nifty 50 target, also revised its one-year forward P/E target from 20x to 19x. In terms of macro impact, assuming the present level of disruption to sustain for three more months, the brokerage projected a 20-30 bps downside risk to FY27 growth estimate, an upside risk of 50-75 bps to FY27 average CPI estimate, 0.1 percentage point upside risk to central fiscal deficit and $25 billion upside risk to current account deficit.
It also anticipated a pause on rates in the next RBI MPC meeting in April 2026 with policy tone leaning towards growth if most of the inflationary impulses are absorbed.