Brokerage Nomura has lowered its December 2026 target for the Nifty 50 index to 24,900, citing rising geopolitical risks linked to disruptions around the Strait of Hormuz and the sharp surge in crude oil prices, which could pose macroeconomic challenges for India.
In its latest India equity strategy note titled “Hormuz halt hikes risk”, Nomura said oil prices have moved above $100 per barrel following significant disruptions to traffic through the Strait of Hormuz, a crucial global energy shipping route that accounts for around 20–25% of global trade in oil and LNG. The brokerage noted that the last time crude prices crossed the $100 per barrel mark was in 2022 after the start of the Russia–Ukraine conflict, but the current escalation is more concerning as the Strait of Hormuz is far more central to global energy supply chains.
Nomura highlighted that India remains heavily dependent on imports of crude oil, natural gas and LPG, and the Strait of Hormuz alone accounts for about 43% of India’s crude oil imports and nearly 63% of LNG imports. Prolonged supply disruptions or elevated oil prices could therefore negatively impact industrial production, increase inflationary pressures and strain the country’s external balance.
The brokerage also warned that the Indian equity markets have already corrected about 8% over the past two weeks, a sharp fall that has occurred only twice in the past decade — first during the Covid-19 pandemic in 2020 and then at the onset of the Russia–Ukraine war in 2022. Nomura said further downside risk cannot be ruled out in the near term, particularly for small- and mid-cap stocks which may face relatively greater pressure during periods of market volatility.
Nomura also pointed out that domestic equity inflows have slowed recently while foreign institutional investor valuation thresholds have declined amid concerns related to rising oil prices and the potential impact of artificial intelligence on corporate earnings, factors that could continue to weigh on market sentiment in the short term.
As a result, the brokerage has cut its December 2026 Nifty target to 24,900 from its earlier estimate of 29,300 and said there could be around 10–15% risk to consensus earnings estimates for FY27 if oil prices remain elevated at current levels. The base case assumes a roughly 7.5% reduction in consensus earnings estimates along with a lower valuation multiple of about 18.5 times price-to-earnings compared with around 21 times earlier.
Nomura expects the Nifty to trade in a broad range of 21,000 to 29,100 depending on how geopolitical tensions evolve and whether energy supply disruptions ease. The brokerage added that defensive sectors such as utilities, coal producers, healthcare, pharmaceuticals, consumer staples and telecom are likely to outperform during the current phase of market volatility, while any correction beyond 5% from current levels could present buying opportunities from a long-term perspective if geopolitical tensions eventually de-escalate and energy supplies stabilise.