Nifty Outlook for CY26
With domestic equities underperforming other asset classes namely global equities, precious metals (gold and silver) in 2025 and corporate earnings on the cusp of revival, we are positive on domestic equity markets. Introducing FY28E and rolling over our valuations, we now value Nifty at 29,500 i.e. 21x P/E on FY28E. Our corresponding target for Sensex is pegged at 98,500. We expect markets to deliver healthy double digit returns over the next 12 months. Given more rational valuations in mid & small caps and strong growth trajectory, we do expect mid & small caps to deliver strong returns in CY26E.
Sectors to watch out for
• BFSI: Revival of credit growth, strong asset quality, valuations at historical mean – strong risk reward in PSU banking space
• IT: Time to relook post healthy corrections as valuations have hit a floor and CY26E will see growth bouncing back
• Capital Goods: Momentum in new projects/tenders point to strong ordering activity in CY26E
• Real Estate: Huge run way of growth as the sector can multiply by 3x over the next 5 years
