If the bulls make a strong comeback, the Nifty 50 could soar past 29,000 within the next 12 months, according to PL Capital's latest India Strategy Report. The brokerage upgraded its bull case target to 29,260, a revision from 28,564 in its previous forecast.
Even in the base case scenario, PL Capital predicts Nifty could reach 27,867, up from an earlier estimate of 26,820. However, in a bearish outlook, Nifty 50 could slide to 25,080.
As of 2 PM, Nifty 50 was down 35 points, or 0.1 percent, at 25,021. The index has been mostly flat for the past six weeks, amid a storm of market volatility driven by geopolitical tensions in the Middle East, a 50 basis point rate cut by the US Fed, and Indian state elections. Despite this, FII inflows surged by Rs 335 billion, while DII inflows remained solid at Rs 891 billion in the past six months, said PL Capital.
PL Capital highlighted the upcoming US presidential election as a factor to watch out for. "Given that the election outcome will shape areas like defence, immigration and energy, it is crucial for India to assess and adapt to US policy shifts without viewing either outcome as categorically favourable or unfavourable."
On the domestic front, PL Capital expressed concerns over populist measures ramped up by both the BJP and the opposition, such as cash handouts and loan waivers, ahead of state elections. "The increased revenue spending to fulfil electoral promises has the potential to create fiscal slippage and potentially affect long-term investments in infrastructure development," PL Capital said adding that similar trends have been seen in Karnataka, Himachal Pradesh, and Punjab.
Sectors to Watch
PL Capital pointed to capital goods, infrastructure, ports, EMS, hospitals, new energy, E-commerce, and telecom as sectors to watch, provided they are available at the right valuations. The brokerage anticipates strong EBITDA growth in hospitals, pharma, capital goods, and chemicals, with double-digit growth expected in auto, banks, and durables. While rural demand is showing signs of recovery, prolonged rains could impact Q2 results. Discretionary spending on travel, housing, jewellery, and two-wheelers remains robust, but challenges persist in passenger vehicles, quick-service restaurants, and building materials.
PL Capital removed stocks like Siemens, Praj Industries, Apar, and Lupin Labs from its top picks after recent rallies, while adding Bharat Electronics, Crompton Consumer, Cyient, JB Chemicals, Jindal Stainless, and Safari to its conviction list.
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