Nifty Prediction 2027: India’s equity markets could be poised for a stronger-than-expected recovery as easing geopolitical tensions and improving macroeconomic conditions provide support to corporate earnings and investor sentiment. According to a report by Emkay, the proposed US-Iran agreement and reopening of the Strait of Hormuz could significantly benefit India through lower crude oil prices, improved supply chains, and enhanced domestic liquidity.
The brokerage believes these developments, coupled with resilient earnings growth and relatively attractive valuations, could create conditions for a multi-asset rally.
Created with AI. Errors are possibleEmkay expects consumption-driven sectors, financials, and select cyclical plays to emerge as key beneficiaries, while maintaining a constructive outlook on the benchmark Nifty index for FY27 despite some near-term risks.
Emkay said, “The US and Iran agreed on a deal to end the war in the Middle East, with the Strait of Hormuz set to re-open on Friday, 19-Jun-26. This has a three-fold macro benefit for India.”
The report highlighted three key benefits:
- Brent crude is expected to settle at USD 75-80 per barrel compared with an average of USD 103 per barrel in April-May 2026, delivering a proforma benefit of 64% on the current account deficit.
- It addresses supply-chain bottlenecks and potential raw material shortage concerns across sectors while averting a possible inflation shock.
- Relief on the external account could improve domestic liquidity and aid interest-rate transmission.
Emkay said, “We expect a multi-asset rally: Rs93/USD, the 10-year gilt to 6.75%, and the 12M T-bill to 5.5%.”
The brokerage expects the consumption cycle to be a major beneficiary, extending the momentum witnessed after GST cuts took effect in Q4CY25.
Earnings outlook set for a strong FY27
According to the report, Indian corporate earnings remained resilient during the recent crisis despite higher energy prices and commodity inflation.
“India earnings held up strongly through the crisis, with a strong 4QFY26 (Nifty PATg: +4%), despite the energy shock and commodity inflation pressures,” Emkay said.
While some residual impact may continue into Q1FY27, the brokerage noted there is no visible instability in earnings momentum.
With energy prices normalising, FY27 forecasts remain intact, with Nifty earnings per share growth projected at 16%, which would mark the strongest year in three years. Financials and consumption are expected to drive the recovery, while the end of the conflict is viewed as supportive for both sectors.
The report also pointed to improving broader market earnings trends. The share of companies in its consensus universe delivering more than 25% EPS growth is expected to rise from 31% in FY26 to 41% in FY27. Meanwhile, only 29% of companies have witnessed EPS downgrades of more than 5% for FY27 estimates since April 1, 2026.
Emkay maintains Nifty target of 29,000
Emkay reiterated its March 2027 Nifty target of 29,000.
“We maintain our FY27 Nifty target at 29,000 and see a strong rally sustaining in the short term. Our bullishness is supported by strong earnings, with FY27E Nifty EPSg at 15.7% and moderate valuations at ~17.8x PER (1YF). OMCs, transportation, cement, and select lenders (banks/NBFCs) are the best ways to play the recovery,” the report said.
The brokerage values the market at 19.6x one-year forward price-to-earnings ratio, broadly in line with long-term averages.
It noted that the recent correction, with the Nifty down 7% since February 28, 2026, has normalised broader market valuations. The benchmark currently trades at 17.8x one-year forward earnings, below its five-year long-term average of 19.6x.
Emkay added that market breadth remains supportive, with 48% of its consensus universe trading below long-term average valuations and 28% trading more than one standard deviation below average levels.
Consumption seen as key recovery theme
The brokerage believes the most immediate beneficiaries of the improving macro environment are likely to be oil marketing companies (OMCs), transportation firms, cement companies and select lenders, along with Middle East-exposed stocks such as L&T.
“The immediate beneficiaries are OMCs, transportation, cement, and select lenders (banks/NBFCs), along with ME-exposed stocks like L&T,” Emkay said.
On the other hand, it believes the investment case for upstream energy companies has weakened, as has the relative appeal of traditional defensive sectors such as FMCG, pharmaceuticals and technology.
Among its preferred ideas to benefit from a market recovery, the brokerage highlighted OMCs, L&T, SHFL, Indigo and Tata Motors’ passenger vehicle business.
Despite its constructive view, Emkay flagged several risks that could challenge its base-case scenario.
“First, the deal gets inked on Friday, 19-Jun-26, so it is still a high probability, but not a certainty – given the number of false dawns during the ceasefire, any disruption would send oil spiking and reverse our entire thesis,” the report said.
The brokerage also cautioned that geopolitical tensions in the region remain elevated and flare-ups could re-emerge even after an agreement is signed.
Another uncertainty relates to the extent of damage to oil infrastructure and the timeline required for supply normalisation.
“Third, the damage to oil infra is still not clear – there may be a negative surprise on timelines for supply normalization (though we think the oil market is pricing in 3-6M delays),” Emkay said.
The report added, “We see low probabilities of these risks crystallizing, and are working of our base case of the SoH fully reopening on Friday and oil receding to USD75-80.”
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
