Markets – Indian Equities Signal Fresh Upswing as Nifty Outlook Improves

Markets – Early indicators suggest that Indian equity markets may be on the verge of a renewed upward phase, with projections pointing to steady gains over the coming year. A new assessment released on Wednesday outlines a base case target of 27,958 for the Nifty over the next 12 months, reflecting growing confidence in the broader economic environment.

Valuation Scenarios Outline Possible Market Trajectory

According to the analysis by PL Capital, market performance could vary depending on valuation multiples and earnings delivery. In a more optimistic setting, where equities trade at 20 times forward earnings, the Nifty could climb toward 30,497. On the other hand, a cautious scenario places the index closer to 26,486, suggesting limited downside even under restrained assumptions.

The firm expects earnings per share growth of 3.8 percent in the near term. More importantly, the medium-term earnings outlook remains robust, with projections indicating a compound annual growth rate of 16.3 percent between FY26 and FY28. This anticipated acceleration in profits is seen as a key pillar supporting market valuations.

Corporate Performance Shows Resilience

Recent corporate results have reinforced the constructive view. Aggregate sales among tracked companies rose 9.9 percent year-on-year, while EBITDA expanded by 16.4 percent. Net profit after tax recorded a 16.7 percent increase compared to the same period last year, underscoring steady operational strength despite global uncertainties.

Analysts note that the extended consolidation phase witnessed in recent months appears to be easing. Structural growth drivers, including domestic demand and infrastructure investment, continue to remain intact even as earnings expectations have been recalibrated in certain segments.

Policy Clarity and Trade Agreements Add Momentum

PL Capital highlighted that India’s economic narrative is entering a decisive period shaped by clearer policy direction, key trade agreements, and sustained infrastructure expansion. These factors, working in tandem, are expected to provide a strong foundation for the next growth cycle.

Amnish Aggarwal, Director of Research for Institutional Equities at PL Capital, said the country is gradually shifting from a cyclical rebound to a more durable growth phase. He pointed out that rising capital formation and productivity gains are laying the groundwork for a multi-year expansion in Indian equities.

A significant catalyst identified in the report is the country’s accelerated trade diplomacy. The progress on the proposed India–EU Free Trade Agreement has been singled out as a potential driver of export growth and industrial activity.

Export-Oriented Sectors Poised to Gain

Labour-intensive industries are expected to be among the primary beneficiaries of deeper trade engagement. Sectors such as textiles and apparel, marine products, leather and footwear, gems and jewellery, chemicals, machinery, and electrical equipment could see improved demand conditions.

Marine exports, leather goods, and the gems segment, which are major sources of employment, are projected to register notable growth if trade flows strengthen as anticipated. The report suggests that expanded access to overseas markets may provide a timely boost to these industries.

Financials and Infrastructure Lead Sectoral Outlook

From a sectoral standpoint, banks and diversified financial companies appear well positioned as credit growth stabilizes in the 13 to 14 percent range. Asset quality trends are expected to remain steady, offering further support to lending institutions.

Capital goods manufacturers and engineering firms are also seen as potential outperformers, driven by ongoing infrastructure development and defense spending. Analysts believe these segments could benefit directly from sustained public investment and capacity expansion across industries.

Overall, the outlook reflects cautious optimism rather than exuberance. While global risks and earnings adjustments remain part of the equation, the structural underpinnings of the Indian economy are viewed as supportive of a gradual, broad-based market advance over the next year.