New Delhi, Nov 12 (IANS): Goldman Sachs expects the Nifty to reach 14,100 by end 2021 which implies 15 per cent upside from current levels.

In a report, the marquee financial services house said while valuations remain extended and could see some pressure, "we expect further market gains driven by earnings recovery".

"We are structural bulls on India but had lowered India to marketweight in April amid nationwide shutdown, rising pandemic cases and expectations of a significant contraction in domestic activity in the absence of fiscal space," it said.

"We think the investment case for India has improved now and upgrade it back to overweight for the following reasons: First, India has been a laggard this year underperforming the region by 11pp in USD terms. As we noted in our recent report, Indian equities are most positively sensitive to the improving prospects of a vaccine, and so we expect a 'catch up' laggard rally given the positive newsflow on the vaccine front (which could spur faster than expected recovery)," it added.

More importantly, on the fundamental side, the domestic macro recovery is underway as suggested by pick up in high frequency activity data points.

"Consequently, our economists expect growth momentum to continue with real GDP growth rebounding strongly to 10 per cent and 7.2 per cent yoy over the next two years (vs. expected -9 per cent this calendar year)," the report said.

"Furthermore, as the economy recovers from the pandemic-induced contraction, we expect corporate profits to rebound 27 per cent next year and a further 21 per cent in 2022, after an expected decline of 11 per cent yoy this year," it added.

"While valuations remain extended and could see some pressure, we expect further market gains driven by earnings recovery and expect NIFTY to reach 14,100 by end 2021 which implies 15 per cent upside from current levels. Sectorally, we expect cyclical sectors to perform better as economic recovery continues to gather pace," Goldman Sachs said.