After one of the weakest first halves for Indian equities in nearly three decades, Goldman Sachs believes the stage is set for a meaningful rebound. The global investment bank has upgraded its outlook on Indian equities, forecasting the Nifty to reach 26,500 by June 2027, implying nearly 10% upside from current levels.
The brokerage believes record foreign institutional selling is largely behind us, domestic macro conditions are improving, and valuations—especially in large-cap stocks—have become far more attractive.
Instead of chasing expensive momentum stocks, Goldman Sachs is recommending investors focus on 15 reasonably valued large-cap companies that could benefit from improving FII sentiment, better Q2 earnings, strong bond inflows, a potential Super El Niño, and long-term themes such as defence and energy security.
Why Goldman Sachs Prefers Large-Caps
Goldman Sachs notes that foreign investors sold nearly $30 billion worth of Indian equities during the first half of 2026, with large-cap stocks bearing the brunt of the selling.
As a result:
- Large-caps now trade close to their long-term average valuations.
- They trade at nearly a 30% discount to mid-cap stocks.
- Earnings downgrades have been much smaller than those seen in mid-caps.
- Foreign ownership has fallen to decade lows, creating room for a sharp recovery if overseas investors return.
Goldman also expects investors to rotate away from expensive growth stocks towards reasonably valued “value” opportunities as India’s economic recovery gains momentum.
Goldman Sachs’ 15 Large-Cap Stock Picks
1. Reliance Industries
Investment Theme: Energy recovery & energy security
Goldman believes the recent correction in energy stocks has created an attractive entry opportunity. Tight refining capacity and improving energy fundamentals could support earnings recovery, while Reliance also offers diversified exposure across telecom, retail and new energy businesses.
2. HDFC Bank
Investment Theme: FII inflows & banking recovery
Financial stocks are expected to be among the biggest beneficiaries of returning foreign investors. Goldman prefers banks due to attractive valuations, healthy asset quality, strong credit growth and improving liquidity conditions.
3. Kotak Mahindra Bank
Investment Theme: Private banking leadership
Kotak complements Goldman’s bullish banking view. The brokerage expects high-quality private banks to outperform NBFCs as liquidity improves and investors seek defensive earnings visibility.
4. HDFC Life Insurance
Investment Theme: Financial sector re-rating
Insurance penetration in India continues to remain low, providing long-term structural growth. Goldman believes improving market sentiment and foreign flows could benefit quality financial franchises such as HDFC Life.
5. Adani Power
Investment Theme: Super El Niño & rising electricity demand
Goldman has upgraded utilities to “Overweight.” A potential Super El Niño could increase electricity demand while reducing hydropower generation, making thermal power producers key beneficiaries.
6. NTPC
Investment Theme: Power demand growth
India’s largest power producer stands to benefit from rising electricity consumption, capacity additions and favourable demand-supply dynamics. Goldman expects power generation companies to outperform if weather conditions remain hotter than normal.
7. Power Grid Corporation
Investment Theme: Transmission infrastructure
Power Grid provides exposure to India’s expanding transmission network, which will be critical as renewable energy capacity grows and electricity demand increases.
8. Adani Green Energy
Investment Theme: Renewable energy & energy security
The company offers exposure to India’s renewable energy expansion and broader energy security agenda, one of Goldman Sachs’ preferred long-term investment themes.
9. Adani Enterprises
Investment Theme: Infrastructure & energy transition
As the Adani Group’s incubation platform, the company offers exposure to multiple high-growth businesses spanning infrastructure, airports, data centres and energy transition initiatives.
10. Hindustan Aeronautics (HAL)
Investment Theme: Defence manufacturing
Goldman remains structurally bullish on India’s defence sector. HAL is expected to benefit from rising defence spending, increasing indigenisation and a strong execution pipeline.
11. Mazagon Dock Shipbuilders
Investment Theme: Naval defence
Mazagon Dock complements Goldman’s defence theme through exposure to naval shipbuilding, submarines and India’s long-term defence modernisation programme.
12. InterGlobe Aviation (IndiGo)
Investment Theme: Tourism recovery
Goldman expects airline profitability to improve as fuel cost pressures ease and domestic travel demand remains robust. Tourism stocks still trade below previous highs despite recent recovery.
13. Indian Hotels Company
Investment Theme: Hospitality growth
India’s hospitality sector continues to enjoy strong occupancy and pricing power. Goldman believes domestic tourism and premium travel demand will remain key earnings drivers.
14. MakeMyTrip (NASDAQ-listed)
Investment Theme: Online travel
The brokerage expects sustained growth in online travel bookings as India’s travel ecosystem continues expanding. MakeMyTrip provides exposure to both leisure and business travel recovery.
15. Eternal
Investment Theme: Domestic consumption & large-cap rotation
Goldman expects domestically focused businesses to outperform exporters as the rupee stabilises and India’s economic recovery strengthens. Eternal fits its broader thesis of large-cap rotation and improving foreign investor positioning.
Goldman’s Preferred Sectors
The 15-stock portfolio reflects Goldman Sachs’ highest-conviction themes for the second half of 2026:
- Banks & Financials: Attractive valuations and likely beneficiaries of returning FII flows.
- Power & Utilities: Supported by rising electricity demand, infrastructure investment and the possibility of a Super El Niño.
- Defence: A long-term structural growth story driven by higher government spending and indigenisation.
- Energy Security: Refiners, power producers and renewable energy companies remain strategic beneficiaries.
- Tourism & Hospitality: Improving travel demand and easing input costs could drive earnings upgrades.
- Domestic Consumption: Businesses linked to India’s internal economy are preferred over export-oriented sectors.
Bottom Line
Goldman Sachs believes India’s market leadership is likely to shift during the second half of 2026. Rather than expensive growth stocks, the brokerage sees greater value in high-quality large-cap companies that combine attractive valuations with strong earnings visibility.
The common thread across its 15-stock basket is clear: companies that can benefit from returning foreign capital, improving domestic macroeconomic conditions and powerful structural themes such as defence, energy security and rising domestic consumption.
While near-term geopolitical risks may continue to create volatility, Goldman Sachs believes these large-cap names are well positioned to participate in the next leg of India’s equity market recovery.
