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Equity markets continued to show strength in April, on the back of easing global tariff tensions, in-line Q4 results so far, positive inflows from both FIIs & DIIs and healthy domestic macros.

Nifty gained for the second successive month in Apr’25 (+3.5% MoM) and recorded its second-best monthly returns in the last nine months. Nifty Midcap 100 rose by +4.8% and Smallcap 100 was up 2.2%.

On the global front, the US President announced a 90-day pause on ‘reciprocal tariffs’ for most countries, effective April 9, 2025 in an effort to provide time for trade negotiations. This move helped ease market concerns and alleviated fears of a potential global economic slowdown.

FIIs remained net buyers for 2nd month in a row with inflows of Rs.2,735 crore in Apr’25, while DII inflows remained remain robust at Rs.28,228 crore.

Earnings of the 27 Nifty companies that have declared results as of 5th May’25 have grown 4% YoY, outperforming our estimate of +2% YoY. Earnings of 109 MOFSL coverage companies grew 6% compared to estimate of -2% YoY decline in 4QFY25

The earnings growth was fueled by Metals (profit surged 67% YoY on a low base), Technology (7% YoY), BFSI (2% YoY), and Oil & Gas (OMC’s profit grew 14% vs. our est. of a 63% decline). In contrast, earnings growth was hit by Real Estate (-10%), PSU Banks (-6%), and NBFC Non-Lending (-7%).

The market has rebounded smartly over the last two months, entirely erasing its YTD decline. The Nifty is currently trading 2.9% higher in CY25YTD. With the current rally, Nifty trades at 21x FY26 PE, near its long-term average of 20.6x. Near-term challenges such as global macros, developments on the US tariff negotiations, and geo-political tensions between India and Pakistan, may keep the market volatile and jittery. However, we believe that the medium to long-term growth narrative for India remains positive

Mahindra & Mahindra Ltd 

CMP : 3009 TARGET : 3482

* MM delivered a strong 4QFY25 performance, revenue grew 24.5% YoY, & EBITDA margin expanded 180bp YoY to 14.9%, driven by improved ASPs across both the Auto & FES segments.

* Management remains confident of outperforming the tractor industry in FY26, supported by a favorable market mix & high single-digit industry growth expectations.

* UV outperformance is expected to sustain in FY26 driven by strong rural recovery and full-year benefit of new launches.

* We estimate MM to post a CAGR of ~13%/13%/18% in revenue/EBITDA/PAT over FY25-27E

ICICI Bank Ltd 

CMP : 1435 TARGET : 1650

* ICICI Bank reported a healthy Q4 performance with PAT Rs.126b (5% beat, 18% YoY growth), driven by robust NIM expansion, healthy other income, controlled provisions and contained operating expenses.

* ICICI posted 11% YoY NII growth with NIM rising by 16bp QoQ to 4.41%. Net advances grew 13% YoY, while deposits rose 14% YoY.

* Secured asset quality remained stable (excl. agri) with no signs of stress, leading to an improvement in the GNPA ratio.

* We thus estimate RoA/RoE of 2.3%/17.5% in FY27. ICICI remains our top preference in the sector.

Hindustan Aeronautics Ltd

CMP : 4423 TARGET : 5100

* Hindustan Aeronautics (HAL) is a market leader in aerospace defense boasting a strong order book of Rs.1.8t as of Mar’25. With a medium-term pipeline of INR 2.4 trillion and a long-term market potential of INR 6 trillion, HAL is set to benefit from key projects like Tejas Mk1A, Su-30 Mk1, and Tejas Mk2.

* HAL is well-positioned for growth due to the strong support from the Indian government's growing defense budget, which is set to rise by 13% YoY in FY26 to INR 1.8 trillion.

* We expect the company’s overall revenue to record a CAGR of 29% over FY25-27, driven by a significant ramp-up in manufacturing and stable revenue from repairs and spares.

Varun Beverages Ltd

CMP : 489 TARGET: 665

* VBL delivered strong 1QCY24 performance with 29% YoY revenue growth, driven by robust 30% volume growth (15.5% organic).

* While margins remained flat YoY at 22.7% due to lower-margin South Africa consolidation, domestic demand stayed healthy with double-digit growth.

* VBL maintained its volume growth trajectory in the domestic market and its expansion in international markets. Management is confident about its double-digit growth guidance on the back of industry tailwinds and expansion into new markets

* We project 18%/16%/26% revenue/EBITDA/PAT CAGRs over CY25-26.

Technical& Derivatives Outlook

* Nifty index made a strong V-shaped recovery in April, bouncing back by over 2500 points from the low of 21743 and reaffirming bullish momentum. On the sectoral front we have witnessed continuous buying interest in the Financial, Energy, Private banking and PSE sector while fresh buying interest is witnessed in sectors like Auto, Pharma, Realty, PSU Banking, Consumption, Defense and Healthcare with some weakness and short build up in IT and Metals.

* Technically, index has formed a bullish candle with longer lower shadow which indicates strong buying at lower levels and closed above the highs of the previous two months. Nifty has started to form higher highs and now it has to hold above 24000 zones for an up move towards 24700 and 25200 zones with immediate support is placed at 23800 and 23500 zones.

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