After maintaining a cautious stance for nearly two years on the domestic equities, Bank of America (BofA) Securities on Monday had a positive outlook and said the <a href="https://www.mid-day.com/business/stock-market/article/sensex-plunges-645-points-nifty-tanks-216-points-in-early-trade-amid-soaring-crude-oil-prices-23649464" target="_blank" rel="none noopener">Nifty</a> could breach the 26,000 levels by this year end, according to news agency IANS.
In its strategy report BofA Securities estimates that the Nifty could touch &nbsp;26,200 by December 2026, a rise of around 12 per cent from current levels.
The brokerage firm's estimates come at a time when the benchmark indices have declined for the fifth straight week. The 50-share NSE Nifty slipped 79.70 points or 0.34 per cent to settle at 23,398.10.
The report further said it had remained cautious view on Indian equities since August 2024 citing eight key risks that could contribute to market volatility. However, it has now adopted a more positive outlook on the market after noting that five of those risks have now either materialised or been largely factored into market valuations. The brokerage expects the remaining risks to peak by October 2026, potentially paving the way for a sustained recovery from November, adding that the three remaining risks could create around 7 per cent downside for the Nifty 50 in its bear-case scenario.&nbsp;
<h2>The key risks to the index</h2>
The three remaining risks include a possible surge in primary market issuances, with around USD 30 billion expected between September and December and issuance activity likely to peak in October. Another risk is the possibility of 75 basis points of Federal Reserve rate hikes, compared with around 35 basis points currently priced by markets. Over the longer term, BofA also flagged the potential impact of artificial intelligence-led disruption on employment in India.
BofA highlighted the heightened activity in primary-market, with around USD 30 billion expected between September and December, with issuances likely to peak in October.
During last week, the booming activity in the primary markets with nearly 12 mainboard initial public offerings (IPOs) valued at over Rs 7000 crore diverted the investor sentiment from the secondary market. This week, the highly anticipated <a href="https://www.mid-day.com/business/business-news/article/nses-rs-22569-croreipo-to-open-on-september-17-for-subscription-price-band-set-at-rs-17001785-per-share-23649474" target="_blank" rel="none noopener">National Stock Exchange's Rs 22,569-crore IPO</a> will hit the market and Jio Platform's massive IPO also expected to launch, probably by this year.
Another risk identified is the possibility of 75 basis points of rate hikes by the US Federal Reserve, compared with around 35 basis points currently priced into markets.
Over the longer term, BofA also flagged the potential impact of artificial intelligence-driven disruption on employment in India as a risk for the economy and markets.
<h2>What were the other risks?</h2>
Crude oil prices were one of the key risks outlined and it noted that the prices have retreated from the USD 100-a-barrel mark seven times over the past seven months.
It had also flagged the Indian currency as a concern earlier but with the <a href="https://www.mid-day.com/business/business-news/article/india-becomes-worlds-fourth-largest-forex-reserve-holder-on-higher-fcnr-b-deposit-mobilisation-23649651" target="_blank" rel="none noopener">Reserve Bank of India &nbsp;(RBI) mobilising forex around USD 136 billion</a> with its swap facility is expected to support the rupee and the brokerage has maintained an appreciation bias on the currency. It expects the RBI to raise the repo rate by 25 basis points by December 2026.&nbsp;
The report had noted weak monsoon conditions as a risk. The current rainfall deficit stands at 13 per cent, close to the 15 per cent worst-case scenario previously anticipated by BofA.
BofA also limited increases in aluminum and copper prices.
(With inputs from IANS)

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Home / Business / Business News / Article / BofA Securities optimistic on Indian equities; expects Nifty to touch 26,200 by December 2026