2 weeks Ago
Global brokerage firm Nomura has predicted a target of 24,970 for March 2026F for Nifty based on the expectation of supportive foreign institutional investor (FII) inflow after 6 months of intense sell-off.“We expect the Nifty to trade in the range of 17-20x one-year forward earnings. We reset March 2026F Nifty target at 24,970 based on 19.
5x FY27F Nifty EPS of INR1,280, after factoring in a 5% cut to current consensus estimates. We raise the target valuation multiple from 18.5x earlier to factor in the drop in yields, assuming no material increase in risk premium.
In case of a stable risk environment, we expect FII flows to be supportive after the intense sell-off in the past six months,” Nomura said in its report.Indian equity markets have rebounded from the losses triggered by the 'Liberation Day' tariff announcement and are now trading about 2% higher. This recovery (since April 2, 2025) has been driven by domestic sectors like consumer and financials, while exporters such as IT, metals, autos, and pharma have lagged.
The Indian markets have managed relatively well, effectively weathering the trade war uncertainties. Favourable factors like falling oil and commodity prices are helping India’s macro outlook. While there are concerns around earnings and valuations, the foreign brokerage firm believes that lower bond yields could support equities in the near term if the risk premium remains contained.
There are hopes that the worst of the tariff news is behind us, though sectors like pharmaceuticals still face uncertainties, Nomura said. Progress on trade talks, especially between the US and China, could be a positive trigger, though reaching a final deal may take time.Additionally, about the Q4 earnings season, Nomura believes there is still downside risk to India’s corporate earnings estimates for FY26 and FY27.
Also read: Rich Dad Poor Dad author Robert Kiyosaki Prediction: $1M Bitcoin, $30K gold, $3K silver by 2035Since September 2024, Bloomberg’s consensus earnings estimates for BSE 200+ companies have already declined by 6%.Current expectations are based on mid-teen growth, but Nomura’s economics team forecasts lower real GDP growth at 5.8% for FY26, compared to the Street's estimate of around 6.
5%.As a result, the brokerage expects earnings growth to align more closely with nominal GDP growth, especially since the earnings-to-GDP ratio is already high. Factors like a slowdown in capital expenditure, weak exports, and poor consumer sentiment are weighing on growth, though lower raw material prices offer some relief, the brokerage said.
Also read: Brace yourself, market is likely to get even shakier: Mark MobiusSectoral outlookNomura stated that it is relatively more positive on domestic sectors, particularly consumption and potential beneficiaries of supply-chain relocation, while it is incrementally more positive on discretionary and autos, where there has been a significant reset of expectations and valuation correction.“We are positive on consumer staples, discretionary, oil and gas, telecom, power, internet, real estate and select domestic healthcare plays,” the report further stated.The brokerage firm added that it is cautious on export sectors and capex themes.
These include IT services, industrials, cement, and metals. Commenting on the pharma sector, Nomura said, “Ensuing US tariffs present near-term headwind, but we expect the impact to be passed on and hence a correction should represent a buying opportunity. We continue to recommend a bottom-up approach and would avoid stocks with very high valuation multiples as any flare-up in risk premium could present significant risk to this segment”.
Stock picksIn the large-cap segment, Nomura has listed Axis Bank, ICICI Bank, State Bank of India, Bajaj Finance, Godrej Consumer Products, Mahindra & Mahindra, Larsen & Toubro, CG Power, Reliance Industries, Tata Power, and Macrotech Developers (Lodha) as its top picks.Meanwhile, Federal Bank, Marico, Dixon Technologies, Uno Minda, GE Vernova T&D India, Lupin, MedPlus Health Services and Dr. Lal Path Labs have been listed as the top picks in the small and midcap segment.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times).
