India's Stock Market on the Rise
According to Emkay Global Financial Services, a domestic brokerage firm, India's stock market benchmark, the Nifty 50, is expected to see an 11% increase in the next year, with a target of 29,000.
Driving Forces Behind the Growth
The predicted growth is driven by a boost in consumption and monetary easing. The GST reforms and structural improvements in affordability are expected to revive consumption and the economy. Additionally, the Reserve Bank of India's (RBI) proactive approach will lead to a revival of retail lending.
Medium-Term Growth Cycle
Despite potential near-term volatility, Emkay Global notes that these catalysts create a favorable setup for India's medium-term growth cycle. Healthy rainfall is expected to aid income and consumption recovery, supported by tax cuts from the FY26 Union Budget.
Earnings Recovery
The brokerage firm believes that FY26 and FY27 earnings have bottomed out and are now poised for recovery. With earnings cuts becoming more muted, 13% of the consensus universe saw less than 10% EPS downgrade during Jul-Sept 2025. Emkay Global forecasts larger upgrades for small and mid-cap stocks compared to large-cap stocks.
Sectoral Outlook for 2026
Emkay Global is Overweight on the following sectors in 2026:
- Discretionary: supported by GST-linked price cuts, urban demand recovery, and improvement in hiring trends
- Industrials: driven by improving demand patterns and structural earnings visibility
- Healthcare: expected to see a sustained recovery
- Materials: driven by improving demand patterns and structural earnings visibility
On the other hand, Emkay Global remains Underweight on Financials, Staples, IT, and Telecom, citing de-rating pressures and intensifying competition.
Investment Advice
Investors are advised to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
Emkay Global's predictions and recommendations are based on their analysis and should not be taken as investment advice. It's essential to do your own research and consider multiple perspectives before making any investment decisions.