Expert view: Seshadri Sen, Head of Research and Strategist, Emkay Global Financial Services, is bullish on the Indian stock market. He expects Nifty to hit 29,000 by March 2027, supported by healthy consumption demand, capex cycle, and reasonable valuations. In an interview with Mint, Sen said he is overweight on autos, discretionary consumption, capital goods, internet, and real estate.
Edited excerpts:
Have your views changed about the Indian stock market after the Q1 results?
We remain bullish on Indian equities. The strong Q1 earnings season was a major positive, with BSE500 top-line growth maintained in double-digits and margins holding up despite the supply chain disruption and raw material price pressures from the Iran conflict.
Materials, telecom, and financials sectors were major contributors to the strong results season. Our Nifty target remains 29,000 for March 2027.
What are the key positives that are making you optimistic about the market? Are there any risks that investors might be overlooking?
Three key positives underpin our optimism. First, consumption demand is holding up strongly after the string of stimuli from policymakers in calendar year 2025 (CY25).
The strength is being seen across categories, both staples and discretionary. We expect it to sustain for the next 2-3 years, though a strong base effect kicks in from the second half of the financial year 2026-27 (2HFY27).
Second, the capex cycle is stabilising, largely led by continued focus by the central government on railways, power and defence. Third, valuations have moderated. India trades at a discount to the five-year average (Nifty PE) and a three-year high EPS growth of 15% expected in FY27.
In relative terms, India’s forward PE premium over global stocks has shrunk from 21% to 5%. Energy prices remain the key risk – if Brent continues to trade at $95-100, it would pressure the CAD, be inflationary, and complicate the rate outlook, undoing much of the macro comfort.
How do you see India’s growth-inflation dynamics? The RBI, in its last policy meeting, highlighted that inflation and growth may not be a concern for the country in FY27. What is your assessment?
We are constructive on India’s growth-inflation mix, despite some risks to the RBI’s benign FY27. The base case is comfortable, with growth holding up at 6.5%+ and inflation contained to below 4.5%, but two external pressures could complicate it.
If crude stays elevated, it would feed through to inflation and potentially force rate hikes back onto the table.
Also, persistently strong US bond yields add pressure on the RBI as it may have to keep an eye on the dynamic between the rate differentials and the currency – the FCNR (B) bonanza mitigates this risk.
What sectors can outperform in the next one to two years?
Our top overweight sectors are autos, discretionary consumption, capital goods, internet and real estate, supported by structural domestic demand, GST rationalisation, rate cuts and the upcoming 8th Pay Commission.
Autos and discretionary should benefit from the consumption recovery, capital goods from sustained government and private capex, healthcare from steady growth, and real estate from a housing upcycle that still has room to run.
How should we play the IT pack? Should we avoid it completely?
No, we would not avoid technology completely. We remain neutral on the sector, as valuations are now more comfortable and the pessimism around AI gutting the traditional IT services has been overstated.
In the near term, however, this is a valuation and sentiment story, not an earnings one. We would, hence, be selective with a clear valuation bias over buying high-growth SMID tech stocks at elevated valuations.
The Fed could hike rates this year. Do you think a cumulative rate hike of 50 bps is possible? How could it impact the Indian markets?
A cumulative 50 bps of Fed hikes is probable only under a specific trigger: crude sustaining near $100. That’s the scenario that would keep global inflation sticky enough to force the Fed’s hand.
For Indian markets, such an outcome would be a clear negative: it would pressure the rupee, harden US bond yields, tighten the RBI’s room to ease, and stoke domestic inflation. Absent that crude spike, a US rate hike is unlikely and not in our base case.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
