Nifty50 to hit 26,000-26,500 in next 4-5 months: Gaurav Bhandari, CEO, MNCL

Bond yields likely to cool off, dollar to weaken and global liquidity to return to risk assets.

MUMBAI, 13 OCTOBER: The Nifty will hit new all-time highs of 26,000-26,500 within the next 4-5 months. Gaurav Bhandari, the firm’s CEO, expects a potential reversal in global macroeconomic conditions setting the stage for a recovery. He expects easing bond yields, dollar weakness and renewed global capital flows to support Indian equities.

Record bond yields breaking the US economy

The US 10-year Treasury yield at 5.35% is at a 24-year high, having surged 110 basis points in CY2026 alone. At these levels, the US government is paying nearly $1.8 trillion annually in interest on debt exceeding $35 trillion, more than its defence budget.

Meanwhile, the 30-year mortgage rate at 7.03% has frozen the American housing market. Historically, the last two instances when the 10-year yield crossed 5.25%, in 2002 and 2007, were followed by yield declines of 40-60% within 18 months.

According to Monarch Networth Capital, the current yield level is unsustainable. “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 expects falling yields to eventually redirect liquidity towards Indian markets.

High trade and fiscal deficits historically precede dollar weakening

The US is running a fiscal deficit of 6-7% alongside a persistent trade deficit. According to Bhandari, this twin-deficit combination has historically preceded major dollar declines. The Dollar Index has already broken below 100 once in 2026, and he expects it to weaken again, potentially towards 95.

A weaker dollar could prompt global investors to rebalance allocations towards emerging markets. Bhandari believes Indian equities could benefit from this shift, noting that they have delivered superior returns during previous dollar-weakening cycles.

Drop in yields would have liquidity chase risk

Bhandari highlighted the $6.3 trillion held in US money market funds as a key potential source of liquidity. As yields decline, returns on these instruments could become less attractive, prompting investors to seek opportunities in riskier assets. The unwinding of global carry trades could further amplify these flows.

He expects the combination of falling US yields and a weaker dollar to trigger a synchronised global liquidity wave. With foreign institutional investors (FIIs) holding substantial short positions in Indian equity futures, a shift in global sentiment could also trigger significant short covering.

The potential sequence, according to Bhandari, is falling US yields, dollar weakness, capital rotation from money market funds, FII short covering and continued domestic inflows of around ₹31,000 crore per month. Together, these factors could drive a valuation re-rating from 18 times to 22-24 times.

Bhandari’s Nifty target is 26,000-26,500 within the next 4-5 months. He believes the market environment favours selective buying in quality stocks rather than a defensive stance.

(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing)

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