Nomura cuts Nifty December 2026 target to 24,900 on Hormuz oil shock
Synopsis
Nomura lowered its Nifty target to 24,900 as oil prices surged and Strait of Hormuz disruptions raised macro and earnings risks.
Nomura has lowered its December 2026 Nifty target to 24,900 from 29,300, warning that disruptions in the Strait of Hormuz and a sharp spike in oil prices pose major risks to India’s macro stability, corporate earnings and equity market outlook.
Key highlights
- Nomura cuts Nifty target to 24,900 from 29,300
- Flags oil above $100 as major risk
- Sees 10–15% downside to FY27 earnings
- Warns of further 5% market correction
- Defensive sectors likely to outperform
What happened
Nomura has lowered its December 2026 Nifty target to 24,900 from 29,300, warning that disruptions in the Strait of Hormuz and a sharp spike in oil prices pose major risks to India’s macro stability and corporate earnings.
The brokerage flagged that Brent crude rising above $100 per barrel, following a halt in shipments through the key oil transit route, marks a far more disruptive scenario than previous supply shocks. It estimates a 10-15% downside risk to FY27 earnings if elevated oil prices persist, prompting a reset in both earnings expectations and valuation multiples.
Oil shock deepens macro concerns
Nomura said the ongoing geopolitical escalation is particularly worrying because the Strait of Hormuz accounts for 20-25% of global oil and LNG trade, making it a far more critical supply artery than disruptions seen during the Russia-Ukraine conflict.
“The current geopolitical escalation is more concerning as it is more disruptive to energy supplies and prices,” the brokerage said, adding that “there are no signs of the disruptions ending at the moment.”
India remains highly exposed, with 43% of its crude oil and 63% of LNG imports routed through Hormuz. Nomura warned that a sustained rise in oil and gas prices would “adversely impact a fledgling growth recovery, drive inflation higher and strain the external balance.”
It added that while prices up to $90 per barrel may be absorbed by oil companies and the government, “any incremental burden beyond this level will be passed on to consumers through higher fuel prices.”
Further downside risk for equities
Indian equities have already reacted sharply, with the Nifty declining about 8% over the past two weeks, a correction comparable to market stress seen during the COVID-19 pandemic and the early phase of the Russia-Ukraine war.
Nomura cautioned that the sell-off may not be over yet. “We think an additional 5% correction is a distinct possibility in the near term,” it said, highlighting that mid- and small-cap stocks are at relatively greater risk.
The brokerage also pointed to deteriorating flow dynamics, noting that domestic equity inflows have slowed, while foreign investors remain cautious amid valuation concerns, rising oil prices and uncertainty around the impact of artificial intelligence.
At the same time, it maintained that deeper corrections could create opportunities. “A correction beyond 5% from current levels should present a buying opportunity from a long-term perspective,” it said, assuming eventual normalisation in oil supply.
Target reset reflects earnings and valuation cuts
Nomura now sees the December 2026 Nifty target in a wide range of 21,000 to 29,100, reflecting heightened uncertainty around geopolitical developments and energy prices.
Its base case assumes a 7.5% reduction in consensus earnings estimates alongside a lower valuation multiple of 18.5x, compared with 21x earlier. A bull-case scenario hinges on a swift de-escalation of tensions and normalisation of oil flows, while prolonged disruption could push markets toward the lower end of the band.
Defensives likely to outperform
Amid the ongoing volatility, Nomura expects defensive and energy-linked sectors to outperform, including utilities, coal, oil producers, healthcare, pharma, telecom and consumer staples.
“Through this phase of market correction, we expect utilities, coal, oil producers, healthcare, pharma, staples, and telecom to outperform,” the brokerage said, while cautioning that valuations in some defensive pockets remain demanding.
It recommended a bottom-up approach with a focus on valuation rather than narrative, advising investors to use market corrections to selectively accumulate quality stocks.
Hormuz disruption at the centre of risk
Nomura underscored that the Strait of Hormuz has effectively become a choke point for global energy flows, disrupting over a fifth of oil and gas trade, with Asia bearing the brunt of the supply shock.
With no immediate resolution in sight, the brokerage said only a de-escalation in geopolitical tensions or a structural shift in the conflict dynamics could stabilise oil markets.
Until then, elevated energy prices and supply uncertainty are likely to remain key drivers of market direction, keeping both macro risks and equity volatility firmly in focus.
FAQs
Q1: Why did Nomura cut its Nifty target?
Nomura lowered its target due to rising oil prices and disruptions in the Strait of Hormuz, which pose risks to India’s macro stability and corporate earnings.
Q2: What is Nomura’s new Nifty target?
Nomura has set a December 2026 Nifty target of 24,900, down from its earlier estimate of 29,300.
Q3: How much downside risk does Nomura see for earnings?
The brokerage estimates a 10–15% downside risk to FY27 earnings if elevated oil prices persist.
Q4: Which sectors are expected to outperform?
Nomura expects defensive and energy-linked sectors such as utilities, oil producers, healthcare, pharma, telecom and consumer staples to perform relatively better.
Q5: What is the key risk to markets right now?
The main risk is continued disruption in the Strait of Hormuz, which could keep oil prices elevated and pressure inflation, growth and equity markets.
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