Muhurat Pick – 2025
• It has been an eventful past year for domestic capital markets marked by highlighted volatility resulting in flattish performance with Nifty hovering around the psychological 25,000 mark for most of the trading year. It was largely impacted by external factors such as geo-political tensions, tariff wars and regime change in key global economies. On the domestic front however, macroeconomics only improved be it the lower inflation (sub 3%), contained fiscal deficit, healthy ~7% GDP growth rate and downward sloping interest rate cycle (down 100 bps in CY25) along with RBI’s focus on adequate systematic liquidity.
• Market performance was also tepid past year tracking consolidation in corporate earnings, albeit on a high base. FY26 earnings however started on a steady wicket with Q1FY26 earnings growth pegged at 6.6% YoY, with full year expectations set at 8.2% YoY. The key highlight in the recent past was the GST 2.0 reforms, which came in as a positive surprise and can potentially lift corporate earnings starting H2FY26. Key near term trigger is the real demand growth across consumer categories in the ongoing festive season consequent to GST rate cut and a potential US-INDIA trade deal. Corporate earnings are expected to grow at 12% CAGR over FY25-27E. We expect double digit earnings growth to resume from FY27E onwards, which should ensure healthy equity returns going forward. Our one year forward Nifty target is placed at 27,000 levels (22x PE on FY27E).
• With improving growth outlook amid greater purchasing power in the hands of consumers through income tax & GST rate cuts as well as government’s relentless focus on increasing manufacturing GDP through policy reforms, we remain positive on markets. With rest of the asset classes namely global equities, debt, precious metals (gold, silver) delivering healthy returns in recent past, stage is all set for domestic equities to outperform peers going forward.
