Nifty 50 at 26,500 in 4-5 months? Monarch Networth CEO points to 3 key triggers

Nifty 50 could hit 26,500 in 4-5 months on 3 key triggers

Bhandari expects these developments to improve global risk appetite and encourage investors to shift money towards equities. A combination of foreign institutional investor (FII) short covering and continued domestic investment could provide additional support to Indian stocks and help valuations recover. However, the projected target depends on these global factors turning favourable and investor sentiment improving.

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If these conditions come together, the Nifty 50 could move towards the 26,000-26,500 range within four to five months, Bhandari believes.

The sharp rise in US Treasury yields is a key concern for Bhandari, who believes elevated borrowing costs could put increasing pressure on the US economy. Figures cited by Monarch Networth Capital put the US 10-year Treasury yield at 5.35%, its highest level in 24 years, following a rise of 110 basis points in 2026.

High borrowing costs are adding to pressure on government finances, housing affordability and economic activity. The US government's annual interest costs are estimated at nearly $1.8 trillion, against outstanding debt of more than $35 trillion. Meanwhile, the 30-year mortgage rate has reached 7.03%, making home financing more expensive.

Bhandari believes these yield levels may not be sustainable and expects a reversal that could redirect global liquidity towards equities. "The yield at 5.35% is not a new normal; it is the peak of an extreme that is already breaking the US economy from the inside," he said.

For Indian markets, a sustained fall in US Treasury yields could improve risk appetite and make emerging-market assets more attractive. The timing and extent of any decline, however, remain uncertain.

A weaker US dollar is the second factor underpinning Bhandari's outlook. He points to the US fiscal and trade deficits as potential sources of pressure on the currency, particularly if investors reassess their exposure to US assets.

According to Monarch Networth Capital's assessment, the US Dollar Index has fallen below 100 at least once in 2026. Bhandari sees scope for further weakness, potentially towards 95.

A declining dollar could improve the relative appeal of emerging-market assets and encourage global investors to diversify their portfolios. For Indian equities, the crucial factor will be whether dollar weakness leads to sustained foreign investment inflows or merely a temporary improvement in market sentiment.

Bhandari has also highlighted the $6.3 trillion held in US money market funds as a potential source of liquidity for global markets. If US yields decline, returns on cash-like investments could become less attractive, prompting some investors to look for better opportunities in equities and other risk assets.

Such a shift could benefit markets including India. Bhandari also expects changes in global carry trades - strategies that seek to benefit from differences in interest rates across currencies - to influence the movement of capital between markets.

However, the money held in US money market funds will not automatically flow into Indian stocks. Any shift would depend on interest-rate expectations, currency movements, investors' appetite for risk and the availability of competing investment opportunities.

Foreign investor positioning in equity derivatives is another potential catalyst. Bhandari believes a substantial build-up of bearish FII positions in equity futures could lead to short covering if global sentiment improves. When investors close short positions, they may need to buy back futures contracts, potentially adding to upward market momentum.

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Domestic investment flows could provide another layer of support. Bhandari's assessment points to domestic inflows of around Rs 31,000 crore a month, which could help absorb selling pressure and sustain demand for Indian equities.

The combination of improved global liquidity, foreign investor short covering and domestic buying could pave the way for a market valuation re-rating. Monarch Networth Capital's assessment suggests valuations could expand from around 18 times to 22-24 times, offering an additional potential source of upside if earnings expectations and investor sentiment remain supportive.

A valuation re-rating is not assured, however. Its sustainability would depend on corporate earnings growth, interest-rate trends and a meaningful recovery in foreign capital flows.