New Delhi–India’s benchmark Nifty index could rise to 27,019 over the next year, up from an earlier projection of 26,449, supported by improving macroeconomic conditions and favorable valuations, according to a report from PL Capital.
The report said India’s long-term growth outlook remains strong, although the domestic economy faces near-term risks from geopolitical uncertainty, weather-related disruptions and inflationary pressures.
Improving domestic demand, lower crude oil prices and attractive market valuations are expected to support the broader equity market despite those risks, the brokerage said.
PL Capital maintained a positive outlook on banks, nonbanking financial companies, capital goods, defense, telecommunications, jewelry, hospitals and consumer durables. It cited favorable trends in domestic demand, infrastructure investment, manufacturing and credit growth.
The brokerage remained cautious about the automobile, consumer, information technology services, cement, chemicals and oil and gas sectors.
Inflation, while currently moderate, could rise because of an unfavorable base effect and the increasing likelihood of a Super El Niño event during the current monsoon season, the report said.
PL Capital valued the Nifty at a 10 percent discount to its 15-year average price-to-earnings ratio based on projected fiscal 2028 earnings. Despite a recent market rally that has lifted valuations, the index is still trading at an 11.7 percent discount to its historical average, according to the report.
The brokerage cautioned that corporate earnings expectations remain under pressure. Further earnings downgrades could occur if adverse geopolitical developments or weather conditions weaken consumer demand and corporate performance.
Corporate earnings for the first quarter of fiscal 2027 have generally remained resilient despite global uncertainty. Profit after tax, excluding the oil and gas sector, is expected to rise 14 percent from a year earlier, supported by demand across banking, nonbanking finance, consumer durables, hospitals, metals, renewable energy and engineering services.
Rural demand has remained stable, although its sustainability will depend largely on the progress of the monsoon, the report said.
The Nifty has gained about 7.3 percent over the past two months and 8 percent from its 52-week low. Credit growth has accelerated to 17 percent, indicating strong demand across retail, services, agriculture and industry.
Government policies have also helped shield the Indian economy from global supply-chain disruptions and fluctuations in commodity prices, the report said. (Source: IANS)
