Kotak’s 2026 Bet: Nifty To Surge Past 32,000; Gold, Silver Set To Retain Sheen

The calendar year is nearing its end. The current year has been a dynamic one for the Indian market. With the Nifty and Sensex touching their all-time highs in the last month of the year, investors are keenly anticipating what lies ahead. Ahead of the beginning of the new calendar year, Kotak Institutional Equities has released its outlook for 2026.

Shripal Shah, the Managing Director and Chief Executive Officer, Kotak Securities, said that India is a beacon of ‘growth and turbulence’ and shared that the firm has an upbeat outlook for 2026 backed by robust earnings and policy support. Shah added that gold is expected to continue to hold its safe-haven appeal.

“India remains a beacon of growth amid global turbulence. Our outlook for equities is upbeat, driven by robust earnings projections and policy support, while gold is expected to retain its shine as a safe-haven asset in 2026,” Shah said.

Here’s a look at some of Kotak’s key projections for the upcoming year:

Nifty To Surge Past 32,000

Kotak sees Nifty reaching a base case target at 29,120 by CY26E end. The company expects profits to grow by 8.2 per cent in FY26E. The brokerage sees a bullish case of Nifty trading at a 10 per cent premium with Price to Earnings (PE) ratio of 22x  to arrive at a target of 32,032 by December 2026. The brokerage also sees a bear case of Nifty trading with a 10 per cent discount with a PE of 18x at 26,208 levels. The brokerage believes a combination of strong domestic economic drivers, improving corporate earnings for India Inc and the continued resilience of domestic investors is likely to drive Nifty’s upward growth in 2026:

Robust Domestic Economic Drivers

The brokerage mentioned in its report that India is among the fastest-growing major economies, which underpins the overall optimism for equities. The report cited the IMF’s global GDP growth projection, which estimates growth to remain impacted in 2026 on account of  weak household sentiment in major economies amid heightened geopolitical and trade-related instability.

According to the International Monetary Fund’s latest estimates, global growth (real GDP) is estimated to slow down to 3.2 per cent in CY25E and 3.1 per cent in CY26E; this is a significant drop compared to 3.3 per cent GDP growth seen in CY24.  On the other hand, India’s real GDP  is expected to grow at 7.8 per cent by the end of FY26 as per Kotak. The brokerage anticipates this GDP growth to be spurred by policy-level support and consumption-boosting measures.

Consumption Boosting Measures

Kotak expects the GST rate rationalisation implemented in 2025, the 125 basis points interest rate reduction made by the Reserve Bank of India (RBI) and an overall benign rate of inflation to aid near-term growth. Measures like income tax cuts for the salaried middle class are also expected to spur consumption by increasing the disposable income of employees.

Long-Term Enablers

Shrikant Chouhan, Head Equity Research, Kotak Securities, mentioned in the report that demographic advantages coupled with investment in infrastructure and the adoption of technology are expected to benefit the economy over the medium to long-term. The brokerage expects central government capital expenditure to be ‘more measured’ with stable allocations in railways,expenditure on roads and highways relative to FY25.

“Over the medium to long term, the Indian economy is well-positioned to benefit from macroeconomic stability, demographic advantages, continued investment in infrastructure, rapid technology adoption, and supportive government policies, all of which are expected to create sustainable growth opportunities,” Chouhan said.

Improving Corporate Earnings and Valuations

Kotak also sees India Inc’s financial report card remaining strong. The brokerage projects the profits of Nifty companies to stabilise by FY26E and surge to 17.6 per cent growth by FY27E. Additionally, the brokerage also stated that Q2FY26 earnings of Nifty 500 companies remained strong, reporting double-digit growth in EBITDA (17 per cent YoY) and PAT (15 per cent YoY).

Resilience of Domestic Investors

The brokerage highlighted that despite Foreign Portfolio Investors (FPIs) paring their holdings in Indian equities, the Indian market has remained resilient, backed by Domestic Institutional Investors (DIIs) such as mutual funds and insurance companies. DII buying has absorbed the selling pressure, highlighting the significance of domestic investor sentiment in determining the market's direction.

Gold and Silver’s Stellar Run

Shah expects gold and silver to sustain their bull run in the upcoming calendar year after delivering strong returns in 2025.

“Gold surged over 60 per cent, hitting $4,380, and silver outperformed with 100 per cent YTD gains. We expect gold to continue shining and silver to follow suit. Tight supply and rising demand from clean energy and technology suggest prices will stay higher, though volatility will persist,” Shah said.

Kotak anticipates the rally in gold prices to extend to the next year on the back of its continued appeal as an essential safe-haven asset, as trade tensions between major economies continue to persist. On the other hand, the demand for silver is expected to be backed by the structural imbalance in its tight supply, coupled with surging industrial demand from the clean energy and technology sectors.

While Kotak’s overall projection for 2026 is positive, the brokerage cautioned investors to be mindful of several global headwinds which are expected to persist, such as  geopolitical tensions, trade protectionism, and currency fluctuations.