Bernstein keeps Nifty target at 26,000 amid policy distortions

Bernstein has reiterated its Nifty 50 target of 26,000, but cautioned that various policy interventions are distorting earnings trajectories and valuations across the Indian equity market. The research firm identified subsidies, reduced GST rates, foreign borrowings and wage revision schemes as key factors reshaping corporate profitability and market composition.

According to the analysis, these policy-led measures are creating a bifurcated market structure where select sectors benefit disproportionately from government support while others face headwinds. This uneven landscape is limiting the potential for broad-based index returns, even as individual pockets of strength emerge in favoured segments.

The brokerage's outlook suggests investors should exercise caution about assuming uniform earnings growth across the Nifty basket. The concentration of gains in policy-favoured sectors raises questions about the sustainability and breadth of the current market rally, particularly for investors seeking diversified exposure through index participation.

Bernstein's assessment underscores growing concerns among market participants about the impact of targeted government measures on market dynamics and valuation sustainability. The maintenance of the 26,000 target indicates confidence in headline levels, but the warning about sectoral distortions suggests achieving that target may involve significant volatility and rotation rather than synchronized gains.