India’s stock market is witnessing a cautious and selective start to 2025, given that the macroeconomic outlook is once again “clouded in uncertainty”, according to Nomura Global Markets Research.
The brokerage assigned a year-end target of 23,784 for the benchmark Nifty 50, after factoring in a 5% downside to the current consensus earnings expectations. The year-end target implies a mere 2.6% upside from Tuesday’s close.
The rise in US yields and policy volatility with US President-elect Donald Trump’s presidency present global challenges, Nomura said in a note. ” For the US, the soft landing expectations are receding and market concerns with no-landing/hard landing are re-emerging.”
There are unprecedented divergences in growth, inflation and rate dynamics across key economies that bring in significant uncertainty, Nomura added. “The risk premium is thus likely to increase.”
As of Monday, the benchmark Nifty 50 saw its worst start to a year since 2016, with a fall of 4.83% in the first nine sessions. Since its life-high last year, the gauge had fallen by 11.5%. The small-cap benchmark—NSE Small Cap 250—has tumbled over 6.40% in the first nine sessions in 2025, the highest in any year.
The slowdown in economic growth momentum and corporate earnings is a negative as expectations remain elevated, Nomura said. The Indian economy is estimated to grow at 6.4% in fiscal 2024-25, the slowest pace in four years.
Valuation multiples are likely to settle lower compared to the multiples prevailing in the recent past, according to analysts at Nomura. “Across most sectors, the valuations are higher than pre-pandemic levels, with the exceptions of financials, oil and gas and FMCG.”
For the BSE 200 stocks, the earnings growth was strong at 23.5% CAGR over fiscals 2019-24. But the street expects the growth to slowdown to 4.5% in the current fiscal, it said. “Corporate earnings are unlikely to outpace nominal GDP growth materially in the near term.”
The brokerage remains highly selective and defensive in stock selection. “We suggest a bottom-up approach that provides relatively high earnings visibility and valuation comfort.” Nomura is overweight on financials, consumer staples, oil and gas, telecom, pharma, power, internet and real estate companies. It is, however, underweight on consumer discretionary, autos, capital goods, cement, hospitals and metals.
. Read more on Markets by NDTV Profit.The year-end target for Nifty by Nomura implies a mere 2.6% upside from Tuesday’s close. Read MoreMarkets, Business, Notifications
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