Mumbai: Nifty is expected to reach 26,889 by December this year, driven by a multi-faceted recovery in domestic demand, supportive monetary policies and focused fiscal initiatives, a report stated on Wednesday.

Reflecting the positive sentiment, “We have raised Nifty 12-month target to 26,889, valuing the Nifty at 2.5 per cent discount to 15-year average PE at 18.5x,” PL Capital, a financial services provider, said in its report.

Domestically-oriented sectors, such as domestic pharma, select staples, banks, capital goods, defence, and power, will outperform in the near term.“In the first quarter, government capital expenditure was front-loaded, recording impressive growth of 61 per cent in April and 39 per cent in May, supported by strong momentum in new project orders and a significant increase in defence spending,” the report said.