Beneficial to reach 29,500 by end of 2026, says BNP Paribas, with backing from HDFC Bank and Maruti Suzuki among top bets

India’s benchmark Nifty 50 could rise to 29,500 by end-2026, which BNP Paribas said would deliver returns in the mid-teens, largely driven by earnings growth. The brokerage urges investors to focus on large, domestically oriented stocks such as HDFC Bank, ICICI Bank, Maruti Suzuki, Mahindra & Mahindra, Reliance Industries and Bharti Airtel, as policy support, easing of financial conditions and a recovery in consumption begin to emerge.BNP Paribas, in its India Strategy 2026 report, said it expects the Nifty 50 to deliver around 15% upside from current levels, with large-caps continuing to outperform mid- and small-cap stocks as valuations remain more comfortable at the top end of the market.

The broker said policy actions taken in 2025, including income tax cuts, a reduction in VAT rates and a cumulative 125 basis point cut in interest rates, are starting to yield positive results early and should boost growth and profits in 2026, especially for domestically oriented sectors. “Our confidence in FY27 earnings has increased and we expect Nifty 50 returns to lead earnings,” the report said.

Largecaps, domestic sectors in focus

BNP Paribas said it is more positive on private sector banks, passenger car makers, telecoms and consumer goods companies, arguing that these sectors are best placed to benefit from improving consumption, easier liquidity and operating leverage. It expects large-cap stocks to continue their outperformance, noting that mid- and small-cap indices continue to trade at significant premiums to the Nifty 50 despite recent underperformance.

In financial services, the brokerage expects a recovery in earnings momentum for private sector banks in FY27, supported by credit growth, benefits from VAT rationalization and strong balance sheets. Top banking choices include HDFC Bank, ICICI Bank and Axis Bank, while SBI Life Insurance is the preferred name in insurance.

On the auto front, BNP Paribas says reduced GST rates have lowered on-road prices and boosted demand, paving the way for margin expansion in 2026. Maruti Suzuki and Mahindra & Mahindra are the top picks for passenger cars.

Telecoms, basic products and other top buying ideas

The brokerage remains positive on the telecom sector, citing expected rate increases, improving free cash flows and potential catalysts for the sector. Bharti Airtel and Reliance Industries are his favorite telecom players. After a weak 2025, BNP Paribas has turned positive on consumer staples, pointing to VAT cuts, a favorable earnings base and macroeconomic tailwinds such as lower food inflation and improving rural sentiment. Britannia Industries, Hindustan Unilever and Doms Industries are among the favorite staples, while Titan and Swiggy are favorite names in the broader consumer space.Additionally, the brokerage’s best buy ideas list also includes Infosys, Amber Enterprises, JK Cement, Aster DM Healthcare and Aurobindo Pharma, based on a mix of earnings visibility, sector tailwinds and valuation comfort.

Valuations are still high, but risks remain

BNP Paribas warned that Indian equity valuations remain elevated, with the Nifty 50 trading above its long-term average, limiting the scope for further revaluation. As a result, the company expects market returns in 2026 to largely reflect earnings growth and not be driven by multiple expansion.

It also reported risks to its bullish view, including limited fiscal space for further policy stimulus, strong equity supply through IPOs and share sales, uncertainty surrounding India-US trade talks, currency depreciation and the possibility of consumer momentum fading after pent-up demand develops.

Still, BNP Paribas said India’s strong domestic flows and improving earnings outlook could make the country an attractive hedge if global investors’ enthusiasm for AI-linked trades wanes, reinforcing the constructive stance on Indian equities in 2026.

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(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)