India’s stock market could see a big move this year, with the Nifty 50 possibly climbing to 29,000 in the next 12 months, according to Emkay’s head of research, Seshadri Sen.
Current market snapshot
So far, the Nifty 50 is up about 10% and sits near 25,942. The Nifty Midcap 100 has risen 5%, while the Nifty Smallcap index is down more than 6%.
Why the market has struggled
- Domestic tightening: Fiscal and monetary tightening in 2024 slowed growth and earnings, leading to downgrades.
- Global pressures: High U.S. tariffs weakened the rupee and pushed capital toward the U.S., especially into AI‑related stocks.
12‑month target for the Nifty 50
Sen projects the index to reach around 29,000 within a year, implying low double‑digit returns. Short‑term volatility may stay, but any pull‑back could be a buying chance as earnings visibility improves.
Mid‑caps and small‑caps could lead the rally
Mid‑cap and small‑cap stocks (often called SMIDs) are expected to outperform over the next one‑to‑two years if investors pick stocks carefully.
- Higher earnings growth and stronger balance sheets.
- Gaining market share in sectors like finance, IT services, non‑pharma healthcare, electronics manufacturing services (EMS), and platform businesses.
- Alpha (extra returns) is more likely to come from SMIDs than large caps.
Impact of a delayed India‑U.S. trade deal
If the trade agreement stalls, the rupee may stay under pressure, making foreign investors cautious. Export‑focused sectors such as textiles and seafood could feel the strain. However, the deal is still seen as inevitable and could boost currency stability and foreign inflows once signed.
Signs that corporate earnings may revive
- FY27 earnings estimates are rising after a long period of cuts.
- More companies are getting earnings upgrades, while downgrades are falling.
- Retail credit growth appears to be bottoming out, supporting consumer spending.
- Recent GST cuts, lower interest rates, and regulatory easing have not yet fully reflected in earnings.
Growth and inflation outlook
Headline inflation is easing and should stay within the Reserve Bank of India’s target band for the next few quarters. Nominal GDP growth is a bit weak, but fiscal and monetary stimulus should help the economy pick up by 2026.
Sectors to watch in the next 1‑2 years
- Discretionary consumption: passenger vehicles, two‑wheelers, consumer durables (e.g., air conditioners), and online platform‑driven spending.
- Industrials: government spending on railways, defence, power and renewables.
- Healthcare (non‑pharma): fast‑growing segments.
- Utilities & power: long‑term structural plays.
- Financials: select small‑ and mid‑size banks and NBFCs over large banks.
Bottom line
While short‑term bumps are likely, a disciplined, bottom‑up stock‑picking approach—especially in mid‑cap and small‑cap names—could generate solid returns as the Nifty aims for 29,000. Keep an eye on earnings trends, currency moves, and the progress of the India‑U.S. trade deal.
Remember, this is perspective, not a prediction. Do your own research and consider consulting a certified financial advisor before making any investment decisions.