Axis Direct, a domestic brokerage, has projected a target of 29,480 for the Nifty index by December 2026, representing a 30% upside from current levels. This optimistic outlook comes after Indian equities underperformed compared to US and other emerging markets in 2025, leading to a moderation in valuations. The FTSE India index is currently trading at a 40% price-to-earnings premium over the emerging markets index, a significant reduction from the 97% premium seen in September 2024. In light of ongoing geopolitical tensions, particularly the US-Israel-Iran conflict, which has disrupted global energy markets and caused crude oil prices to soar above $100-110 per barrel, Axis Direct has recommended a selection of 15 stocks, including Kotak Mahindra Bank and Bajaj Finance, to navigate the expected volatility. The brokerage also noted a bear case scenario where the Nifty could drop to 23,865, still above current levels. The volatility is exacerbated by foreign institutional investor outflows exceeding $19 billion in 2026, driven by rising US yields and geopolitical risks. Despite these challenges, the medium-to-long-term outlook for the Indian economy remains positive, supported by resilient domestic demand and structural reforms. Investors are advised to maintain liquidity of 10-15% to seize opportunities during market dips.