Nifty's 2025 twist: Are Indian stocks headed for another record-breaking year?
Live Events
Trade agreements and global tailwinds
Better corporate earnings
Valuations: A mixed view
Good monsoon is good news
What lies ahead?
(You can now subscribe to our
(You can now subscribe to our ETMarkets WhatsApp channel
At the start of 2025, the Indian equity markets faced a clouded outlook. Concerns over high valuations, persistent foreign institutional investor (FII) outflows, trade wars painted a cautious picture. Then came the India Pakistan tensions, which went out of control for a brief period. However, as we approach mid-year, a confluence of positive developments has shifted the narrative, prompting once gloomy analysts to reassess their projections for investor returns.Benchmark Nifty has surged almost 17% from the lows, setting the stage for another recording breaking year, according to analysts.A significant turning point was the de-escalation of tensions between India and Pakistan, culminating in a ceasefire agreement. This move alleviated investor concerns about regional instability.Palak Shah, VP – Institutional Sales, PL Capital, emphasized that the ceasefire restored stability to a region known for its geopolitical volatility. 'Investors were quick to price in the positive development, triggering a strong rally,' she added.Globally, the environment has also turned favorable. The United States has made significant headway in trade negotiations with major partners, including China, the UK, and the European Union. The recently signed India-UK Free Trade Agreement (FTA) is expected to benefit sectors like textiles, gems and jewellery, and automotive components.This deal eliminates tariffs on 99% of Indian exports to the UK, benefiting sectors like textiles, gems and jewellery, and automotive components. In return, India has reduced tariffs on UK exports, including scotch whisky, cosmetics, and medical devices.Vinit Bolinjkar, Head of Research at Ventura , pointed out that such trade deals have not only improved global sentiment but also driven FII inflows into Indian equities.Beyond geopolitics and global trade, domestic fundamentals have been another pillar of support. Corporate earnings for the fourth quarter have surpassed expectations. According to Siddhartha Khemka, profits of 27 Nifty companies grew by 4% year-on-year (YoY), beating the estimated 2% growth. Among 109 Motilal Oswal Financial Services (MOFSL)-covered companies, earnings rose by 6% against an expected decline of 2%.Sectors such as metals, technology, BFSI, and oil and gas led the earnings growth. Metal companies posted a 67% YoY profit surge on a low base, while oil marketing companies (OMCs) delivered a 14% profit growth, defying expectations of a decline.Analysts are mixed on Nifty's valuations. While for some, they remain relatively comfortable, others still point to the expensive nature. It is currently trading at 21.6x FY26 P/E, just 5% above its 10-year average of 20.6x.Vinit Bolinjkar from Ventura said that while valuations are on the higher side, they are not overly stretched. 'The trend may remain bullish, but intermittent corrections can't be ruled out,' he cautioned.Palak Shah of PL Capital also mentioned that although valuations have improved, they still have room to go higher. 'With improving macros from both domestic and global perspectives, large-cap stocks are well-positioned to outperform,' she said.On the domestic front, favorable monsoon predictions have further improved the outlook. The Indian Meteorological Department (IMD) has forecast above-average rainfall, which, combined with recent tax benefits, is likely to boost rural consumption. This could provide a further push to sectors like consumer goods, automobiles, and retail, which are highly sensitive to rural demand.Atish Matlawala, Senior Fundamental Analyst at SSJ Finance & Securities, believes that India's strong structural growth story remains intact. 'While Nifty's valuations are not very cheap compared to other emerging markets, India's growth prospects are significantly stronger,' he stated.With the geopolitical overhang easing, improving corporate earnings outlook, and supportive global trade developments, the outlook for Nifty has improved significantly from the start of the year.Analysts now expect moderate to strong gains for the rest of 2025, with key triggers including the continuation of FII inflows, sustained corporate earnings growth , and stable global economic conditions. FIIs have also returned as net buyers, injecting over Rs 14,000 crore into Indian markets since the beginning of the month. This reversal of FII flows will be a critical driver of the Nifty rally, which had been under pressure due to sustained outflows earlier in the year."The return of FII flows has been a game changer, but this liquidity-driven rally needs earnings to keep pace. Investors should focus on quality stocks rather than chasing momentum," Narendra Solanki, Head of Fundamental Research at Anand Rathi Shares and Stock Brokers said."Nifty is well-positioned to deliver healthy returns, even breach highs, through the rest of the year, especially if earnings recovery sustains and global economic risks are contained," Khemka said."There is a reasonable likelihood of a positive Nifty return for the year. One cannot predict geopolitical events in the future and there is a reasonable likelihood that the recent hotspots which are seemingly cooling down might not flareup again," said Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital.However, there are cautionary notes. While valuations are not excessively high, they are not cheap either. The possibility of intermittent corrections cannot be ruled out, especially if global risk factors re-emerge.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
an hour ago
- Mint
Lenskart receives shareholder nod to raise ₹2,150 crore via IPO: Report
Lenskart IPO: Peyush Bansal-led Indian eyewear company Lenskart has received the approval of its shareholder to raise ₹ 2,150 crore through a fresh issue of shares, reported MoneyControl, citing people aware of the development. According to news report, the company filed its corporate action development with the Ministry of Corporate Affairs' (MCA) Registrar of Companies (RoC), as per the data accessed by TheKredible. The proposal to raise money via an IPO was reportedly given the green light at the company's annual general meeting on 26 July 2025, said the report, adding, the eyewear company is expected to file its draft red herring prospectus (DRHP) with the capital markets regulator, the Securities and Exchange Board of India (Sebi), in the upcoming days. The overall IPO size is expected to be around $1 billion or ₹ 8,500 crore, which includes a secondary offer-for-sale (OFS) component by the existing investors, the report added. Earlier this month, Mint reported that the eyewear company's founder, Peyush Bansal, is looking to buy a 1.5-2% stake in the eyewear retailer worth about $150 million from existing investors ahead of its planned IPO. Peyush is buying small stakes from a bunch of investors. This is being negotiated at around $7-8 billion valuation. Existing investors like TR Capital, Chiratae, Softbank and Kedaara Capital are expected to sell their stake as part of the deal. Over the years, the company has raised $1.08 billion in funding across 19 rounds, including its latest Series I round for $18.2 million on 21 July 2023. It has received investments from various firms, including SoftBank Vision Fund, TPG, and Chiratae Ventures. Kotak Mahindra Capital, Axis Capital, Citi, Morgan Stanley, and Avendus Capital are the company-appointed book-runners for the IPO, which is soon expected to hit Dalal Street. The company was founded in 2010, and since then, it has emerged as one of the biggest players in the Indian eyewear industry. It has 2500 retail outlets across the nation and a presence globally, such as in Singapore and the United Arab Emirates (UAE).
Time of India
an hour ago
- Time of India
Robust tourism helps excise dept boost revenue by 45% since 2022
Panaji : Goa's excise department has seen a significant jump in revenue, with a 45% increase over the last four financial years. The department raked in Rs 947.9 crore in 2024-25, as against Rs 650 crore in 2021-22. This increase is attributed to robust tourist footfalls and enforcement by the department. Goa's excise collection shot up to Rs 865 crore in 2022-23 due to several measures implemented by the excise department. In 2023-24, the department's revenue increased to Rs 900.2 crore. Goa's excise revenue is largely driven by tourists who either purchase alcohol from retail stores or consume liquor at restaurants and hotels. Alcohol sales are also driven by events in the state. Data shared with the legislative assembly also shows that Rs 4.1 crore is owed to the department by 242 retail outlets, bars and alcohol manufacturers since 2018. Of the 242 defaulters, most are from Tiswadi and Salcete talukas. While some of the licence holders have come forward and cleared their dues, the department has been forced to issue notices to most of the excise licence holders to recover what is owed. Those outlets which have ignored notices and reminders to pay the annual audit fees risk having their licences being cancelledwith the department already proposing to cancel some licences">, said officials. In the Goa budget 2023-24, the excise duty on high-end liquor was reduced and duty on other categories of Indian made foreign liquor (IMFL) was marginally increased to shore up revenues. The department said that while no tax refund or waiver has been granted under the Excise Duty Act, applicants have been offered an adjustment of excise duty only in cases where permits are cancelled and the said excise duty paid for liquor goods in these cancelled permits are adjusted in their future permits.
Deccan Herald
an hour ago
- Deccan Herald
India ready to share AI models with Global South: S Krishnan
The Indian government is open to sharing its AI models with the Global South after achieving reasonable capacity and scale, a senior government official said on Friday. While speaking at FICCI's conference Bhashantara 2025, Electronics and IT Secretary S Krishnan said that the development of technology for languages to help people communicate in a frictionless manner can lead to huge value addition to the economy. He said that the UN Under-Secretary-General, during a visit to India, had appreciated India's AI-related works. 'We had a discussion and then he said your model appears interesting. At a stage when you have adequate capacity both in terms of compute and in terms of the kind of models that you have, will you be willing to share this with the Global South? This is something that we have declared that we are open to doing and something that we will do,' Krishnan said. The Global South term refers to developing and less-developed countries in Africa, Asia and Latin America regions. The government has launched the Bhashini project for the development of AI-based language translation technology. Krishnan said most people in the country would prefer to communicate through voice as opposed to in writing. 'I think voice-based communication has a critical role to play and that is where India can truly lead. The minute you say it is voice, then it means that you have to pick it up in the language that they are most comfortable with and what they would like to speak in. This is clearly the challenge that there are a number of researchers, a number of innovators and others who are addressing nationwide,' he said. 'With more than 6 billion people globally not speaking English as their primary language and India home to 19,500 languages and dialects, data emphasised the vast commercial opportunities that lay ahead,' he said. Data said that website names in local scripts will ease communication for the vernacular masses.
