Nifty likely to surge over 21 pc to reach 27,589 in 12 months
Indian equity market benchmark Nifty is expected to reach 27,589 within 12 months, up 21.42 per cent from Tuesday's closing and 1.68 per cent higher from earlier expectation of 27,133, a report said, predicting that markets will remain volatile and potentially move lower before entering a consolidation phase.
The report from PL Capital said escalating geopolitical tensions, rising inflation, deficient monsoons and higher interest rates are likely to keep Indian equity markets under pressure in the near term.
"While domestic economic growth and corporate demand have remained resilient, the brokerage cautions that mounting macroeconomic headwinds could weigh on consumption, earnings and foreign investor flows," the report noted.
Moreover, the headline index has declined 8.2 per cent over the past six weeks and is down 6 per cent year-to-date, the report said and added that a V-shaped recovery appears unlikely.
Nearly 13 per cent monsoon deficit, the likelihood of a very strong El Niño and rising commodity prices pose risks to inflation, rural demand and corporate earnings.
The water reservoirs also stood at 21 per cent lower than the levels last year, putting soil moisture and the coming Rabi crop season in danger.
The report forecasted 16.2 per cent sales growth and 14.7 per cent EBITDA growth in Q2FY27, excluding oil & gas. It maintained an overweight stance on capital goods, healthcare, banks, metals, diversified financials, telecom and ports.
Indian markets remained under pressure primarily due to continuous selling by foreign institutional investors (FIIs) on account of fears relating to the effect of inadequate monsoon rains, rising cost of crude and agricultural commodities, high bond yields, and the growing Iran-US conflict, which has now spilled into the broader Middle East region.
“Higher global bond yields and relatively subdued dollar-adjusted returns are also likely to constrain foreign investor flows," said Amnish Aggarwal, Co-Head – Institutional Equities, PL Capital.
The report urged investors to remain selective, focusing on companies with strong fundamentals and sectors supported by domestic investment and structural growth opportunities.
Notably, Sensex closed over 1,100 points or 1.54 per cent higher at 73,033.78, while Nifty settled at 22,721.95, an increase of 358.60 points or 1.6 per cent.
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