In its newest India technique report, the brokerage mentioned India’s macroeconomic resilience, enhancing earnings outlook, and continued coverage help are doubtless to assist markets climate near-term world volatility.
The brokerage expects the Nifty to achieve 29,000 by March subsequent 12 months primarily based on a goal valuation a number of of 19.2 instances FY28 earnings. The report comes at a time when world markets are grappling with heightened uncertainty linked to the extended battle in West Asia and disruptions across the Strait of Hormuz, a essential world oil transport route.
Brent crude costs have remained elevated within the $105–110 per barrel vary after the Strait of Hormuz remained shut for greater than 11 weeks, in keeping with the report.
Emkay warned that extended excessive oil costs might materially have an effect on India’s financial system, given the nation’s dependence on imported power. In keeping with the brokerage’s situation evaluation, if Brent stays round $100/barrel, India’s present account deficit might widen to 2.4% of GDP from the sooner baseline estimate of 1.3%.
GDP development might additionally average to six.3% from the sooner expectation of seven%, whereas client inflation could rise to 4.6%. In a extra extreme situation the place crude costs surge to $130 per barrel, Emkay estimates India’s GDP development might sluggish additional to five.5%, and inflation might rise to five%.
Nonetheless, the brokerage believes the broader long-term development story for Indian equities stays intact.”Whereas world geopolitical developments and elevated crude costs could proceed to create intermittent volatility, India’s structural development drivers stay intact,” mentioned Seshadri Sen, Head of Analysis and Strategist at Emkay International.
“Earnings resilience, coverage help, easing home inflationary pressures, and ongoing capex investments proceed to supply a robust basis for Indian equities,” Sen mentioned.
He added that any sharp correction triggered by world considerations needs to be seen as a long-term shopping for alternative fairly than a structural menace to India’s development outlook.
Emkay mentioned the March quarter earnings season has began on a comparatively secure notice regardless of world uncertainty. Amongst firms underneath the brokerage’s protection universe which have reported outcomes to date, 46% delivered earnings above expectations, whereas solely 29% missed estimates.
The brokerage has retained its FY27 Nifty earnings per share estimate at Rs 1,230 and continues to count on almost 13% earnings development. The report famous that the Nifty is presently buying and selling round 19.2 instances FY27 ahead earnings, near its five-year common valuation.
Emkay believes markets are nonetheless under-pricing the earnings restoration anticipated throughout FY27 and FY28. The brokerage expects almost 14% cumulative earnings development over the subsequent two monetary years.
On the sectoral entrance, Emkay stays chubby on discretionary consumption, industrials, supplies and actual property whereas staying underweight on financials, power, healthcare, staples, telecom and know-how within the close to time period.
The report additionally highlighted considerations round gas under-recoveries for oil advertising firms.
In keeping with Emkay, the latest Rs 3 per litre improve in gas costs addresses solely round 20% of the present under-recoveries, suggesting extra gas worth hikes could change into needed if crude costs stay elevated.
The brokerage described sustained excessive crude costs as a “four-way drag” on the financial system as a result of they concurrently have an effect on inflation, authorities funds, company profitability and family spending.
Regardless of the near-term pressures, Emkay mentioned a number of home coverage measures proceed to help financial exercise. These embrace earnings tax cuts, GST reductions and cumulative RBI price cuts of round 125 foundation factors since February 2025.
The brokerage mentioned these measures are anticipated to enhance liquidity, help discretionary consumption and encourage private-sector funding. Authorities spending on railways, defence and infrastructure additionally continues to help financial exercise and employment technology, in keeping with the report.
Emkay additional mentioned the rupee could stay underneath strain within the brief time period due to excessive crude costs and a stronger US greenback, although the Reserve Financial institution of India is more likely to preserve a cautious coverage stance to protect macroeconomic stability.
The brokerage expects the rupee and bond markets to stabilise as soon as geopolitical tensions ease and oil provide routes normalise. The report additionally pointed to enhancing traits in monetary companies sectors corresponding to NBFCs and insurance coverage.
In keeping with Emkay, the NBFC sector has seen vital re-rating over the previous few years as a consequence of higher steadiness sheets, decrease NPAs and stronger capital adequacy. It added that whereas the tempo of outperformance versus banks could average, choose NBFCs stay well-positioned to ship wholesome development and profitability.
