Citi downgrades India to 'Underweight' amid earnings and geopolitical risks

ET BureauLast Updated: May 09, 2026, 07:57:00 AM IST

Synopsis

Mumbai Citi has downgraded India to underweight, citing persistent macroeconomic and geopolitical challenges alongside weaker earnings projections. The brokerage anticipates an 11.7% upside for the Nifty, reaching 27,000. While acknowledging lighter market positioning, Citi's earnings forecasts for FY27-28 are still factoring in the Iran War's impact. Banks, telecom, defence, and pharma are favored sectors.

Mumbai: Citi downgraded India to underweight, citing continued macroeconomic and geopolitical headwinds along with relatively weak earnings. The brokerage set a target of 27,000 on the Nifty, implying an upside of 11.7% above Friday's closing of 24,176.

"India has scored poorly in our model for some time, though macro/EPS inflection looks trickier amid headwinds from higher commodity prices," said Citi in a client note. "We note that positioning remains light and market pricing of EPS outcomes looks more reasonable than elsewhere."

The brokerage said its earnings growth estimates for FY27 and FY28 are yet to fully reflect the impact of the Iran War.

It's most bullish on banks, telecom, defence and pharma, while underweight on consumer, staples and IT services.

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