While maintaining its bullish view on the Indian economy and equity markets, Emkay Global Financial Services believes that the domestic stocks market is close to bottom out and stress from the falling rupee is expected to ease from April 2025. Amid the ongoing selling on Dalal Street, the benchmark equity index has plunged nearly 10% since October 2024. On the other hand, BSE Midcap and BSE Smallcap indices declined 19% and 21%, respectively, during the same period.
The brokerage highlighted that earnings downgrades are done, and EPS growth will bounce back from FY26. “Indian equities to remain weak in Q1CY25, with extreme volatility. However, Nifty may touch 25,000-mark by December 2025. Earnings downgrade cycle is nearly over and selling by foreign institutional investors may abate by Q2CY25 on earnings stability, moderate valuation and peeking out of the US dollar in Q1CY25,” Emkay Global Financial Services said in a webinar. The 50-share Nifty index traded at 22,860 in the afternoon trade on February 18.
Global investors have offloaded shares worth Rs 1 lakh crore since January 2025. “This is the last quarter of heavy selling by foreign institutional investors,” Emkay Global Financial Services said adding Nifty index may see 13.5% earnings growth in FY26 against the expected 5.7% in FY25.
Sector wise, the brokerage is overweight on consumer discretionary on the expected turnaround. It is also overweight on healthcare and real estate. On the other hand, it has downgraded the energy and technology sectors to ‘Neutral’ on valuations. It is underweighted on financials as valuations are yet to adjust to reality.
For stock-specific investors, it suggested Lupin (target price: Rs 2,800), Zomato (Rs 310) and Tata Motors (Rs 2,800) in the large cap space. On the other hand, it is bullish on IndusInd Bank (Rs 1,400), Escorts (Rs 4,000) and Paytm (Rs 1,050) in the midcap segment. In the small cap space, Emkay Global Financial Services is positive on StoveKraft with a target price of Rs 1,200, indicating an upside of nearly 70% against the current market price. The brokerage is bullish on Metropolis Healthcare (target price: Rs 2,349) and Quess Corp (Rs 800).