Market outlook: Why analysts see stock indices going up from here

Concerns over a potential sharp market correction, amid a global technology selloff, have unsettled investors. However, a couple of domestic brokerages believe Indian equities are poised to move higher, supported by a recovery in corporate earnings and improving macro conditions. 

Emkay Global suggested a Nifty target of 29,000 for December 2026 and said the positive third-quarter earnings trend reinforced its constructive stance on Indian equities. “Despite the labor code hit, the BSE-500 delivered a 16 per cent PAT growth, outperforming the Nifty 50 at 8 per cent. We remain bullish on Indian equities, with the announcement of the India-US trade deal marking an inflection point for the markets,” it said.

Kotak Institutional Equities said the Indian market could witness a gradual upward movement in the next few months after a prolonged phase of stagnation. It attributed this to an improving earnings outlook, although it cautioned that high and potentially moderating multiples in consumption sectors could act as a drag. The brokerage described the December quarter results as decent, with strong revenue and earnings growth in consumption segments, which augured well for FY2027E earnings.

It added that market and sector valuations remained elevated despite the extended time correction. “We base our constructive view on earnings on (1) higher nominal GDP growth in FY2027 at around 10 per cent versus around 8 per cent in FY2026; (2) recovery in consumption demand from the second half of FY2026, aided by lower GST, income tax and interest rates; and (3) stronger export revenues on the ‘conclusion’ of the long-pending India-US trade deal,” it said.

MOFSL said the heavy lifting by the RBI and the government through a series of stimulative monetary and fiscal measures improved the macro environment for earnings. It noted that Nifty valuations at 20.4 times were marginally below its long-period average of 20.9 times on a 12-month forward earnings basis. The brokerage remained overweight on auto, PSU banks, diversified financials, technology, consumer discretionary and capital goods.

“We are Neutral on Telecom, Cement and Healthcare, while maintaining our UW stance on Pvt. Banks, Consumer Staples, O&G, Utilities and Metals within our model portfolio,” it said.

MOFSL added that the abatement in FII outflows over the year may help India retrace its underperformance compared with key global markets. However, it cautioned that ongoing disruptions in the IT services sector and their potential spillover impact on other sectors remained a key near-term monitorable.