Nomura increases FY26 Nifty target to 26,140

Q4FY25 earnings season has almost come to an end, and India Inc has logged out of FY25 with a stronger-than-expected earnings show. During the quarter, analysts point out that 13 sectors surpassed expectations and delivered broad-based outperformance across key aggregates. Meanwhile, PAT growth for the Nifty and BSE500 stood at 0.5 per cent and 8.7 per cent.

Japanese investment bank and brokerage Nomura in its India Equity Strategy report is bullish on Nifty in FY26, notwithstanding the global macro headwinds. “Against the current macro backdrop, we assess the fair value range for the Nifty at 18-24x one-year forward earnings, which implies upside/downside of 24 per cent/12 per cent from current levels. Assuming benign risk premium and low yields, we raise the target valuation multiple to 21x (from 19.5x previously). Based on 21x P/E on FY27F earnings, we arrive at our March 2026 Nifty target of 26,140 (vs 24,970 previously), suggesting potential upside of 6 per cent from current levels.”

Explaining the rationale, the report says that the Indian equity markets have been resilient in the recent past despite corporate earnings estimate cuts and global uncertainties. “We think positive domestic macros, as reflected in the significant fall in yields and the relatively lower beta of Indian equities underpinned by consistent domestic flows are supporting market valuation,” it adds.

However, significant weakness in the global economy due to trade disruptions and policy uncertainties remain a key risk, according to the report.

With worries around reciprocal tariffs largely receding, and focus shifting to bilateral trade treaties, domestic brokerage Emkay Global Research expects Nifty FY26 EPS growth at about 12-13 per cent. “Markets saw a V-shaped rally following the tariff pause; we expect the beta rally to continue and any dip should be viewed as an entry point,” it says in a recent report.

Motilal Oswal Financial Services echoes similar sentiments when it says, “Despite near-term volatility from global macro issues, trade tensions, and earnings concerns, India’s medium-to-long-term growth story remains solid.”

Midcaps are no longer just a beta play—they are increasingly becoming alpha generators. Their ability to adapt, diversify, and scale across core economic themes like electrification, infrastructure, and financial inclusion reinforces their relevance in long-term portfolios.

Small-caps remain a barbell segment—capable of both strong rebounds and deep corrections. Earnings volatility remains high, and stock selection is critical. Investors should focus on quality names with sustainable business models, visibility, and operating leverage.

Rally since Apr 9

The Nifty has rallied about 10 per cent since Trump’s pause on April 9. “We view current Nifty levels as fundamentally supported, with further upside likely as the earnings cycle shows signs of inflection. Accommodative monetary mix of rate cuts, liquidity injection, and lending deregulation provide comfort,” Emkay Global adds.

Last week, Morgan Stanley, global investment advisor, said expects the benchmark BSE Sensex to hit 89,000 by June 2026.

According to Morgan Stanley, key India-specific catalysts include more dovish actions from the RBI, stimulus through GST rate cuts, a favourable trade deal with the US and incoming growth data, both domestic and global.

Published on June 2, 2025