Domestic brokerage house Axis Securities believes indian stock market benchmark Nifty 50 has the potential to reach 25,500 by March 2026 highlighting India’s favorable long-term growth story supported by rising capex, consumption, and credit growth from the Union Budget and GST 2.0 reforms. They forecast a 13% CAGR in Nifty earnings over FY23-27, with financials being the largest contributor. However, they cautioned that trade policy uncertainty, rupee depreciation, and delayed earnings revival remain near-term risks.
“The current level of India’s VIX is below its long-term average, indicating that the market is currently in a neutral zone (neither panic nor exuberance). While the medium to long-term outlook for the overall market remains positive, we may see volatility in the short run. Hence, we recommend investors maintain good liquidity (10-15%) to use any dips in a phased manner and build a position in high-quality companies (where the earnings visibility is quite high) with an investment horizon of 12-18 months,” it said in a note.
Nifty’s target: The base, bull, and bear case scenarios
The base case, or the most likely or expected target of Nifty 50, is 25,500.
“In our base case, we revise our Mar’26 Nifty target to 25,500 by valuing it at 20x on Mar’27 earnings. (After Q1FY26, we saw a cut of 3% in FY27 earnings). Based on the expectations of the earnings upgrade starting from Q3FY26 onwards, we see upside risk to our target,” stated the brokerage.
In the bull case, Axis Securities values Nifty at 21 times, translating into a March 2026 target of 26,800.
“Our bull case assumption is based on the Goldilocks scenario, which assumes an overall reduction in volatility and a successful soft landing in the US market. The market is keenly watching the global growth scenario in 2025 under Trump’s presidency. Furthermore, private Capex, which has been sluggish for the last several years, is expected to receive a much-needed boost in the upcoming years, with the expectation of policy continuity,” it explained.
In the bear case, Axis values Nifty at 17 times, arriving at a March 2026 target of 21,600.
“We assume the market will trade at above-average valuations, led by the likelihood of a policy shift in the Trump regime. Moreover, we presume that inflation will continue to pose challenges in the developed world. The global market has not seen such elevated interest rates in the recent past. Hence, the chances of going wrong have increased significantly. Nonetheless, the direction of currency, oil prices, and global trade developments will likely put pressure on export-oriented growth in the remaining part of FY26,” said Axis.
Rebound likely in October?
Indian equity markets saw mixed trends in September 2025, following a four-month rally that cooled off in July and August. Axis Securities noted that while structural reforms such as GST rationalisation initially boosted sentiment, the market struggled to maintain momentum. Factors such as “depreciation in the Indian currency, mixed trends in US policies, inventory overhang due to GST cuts, FII selling, and earnings revival still a quarter away” contributed to cautious trading.
Geopolitical challenges also weighed on sentiment, with the Trump administration imposing tariffs on Indian products and raising visa charges for the IT sector, which Axis Securities highlighted as “further hurting the sector already struggling with growth.”
“Risk-Reward is slowly building towards Mid and Smallcaps. Nonetheless, recovery will be slow and gradual as we progress towards FY26, led by strong earnings expectations, improving domestic liquidity, and stable Indian macros. We believe the
market needs to sail through another couple of months smoothly before entering into a concrete direction of growth. As a result, we expect near-term consolidation in the market, with breadth likely remaining narrow in the immediate term,” said the brokerage.
Market Strategy for October
Axis Securities recommends focusing on “growth at a reasonable price” by investing in quality stocks, market leaders, monopolies, and domestically-focused sectors. Their sector preferences include BFSI, telecom, consumption, hospitals, interest-rate proxies, and select capex-oriented plays, while maintaining a cautious stance on export-oriented sectors due to tariff risks and macroeconomic uncertainties.
“We continue to 1) like and overweight BFSI, Telecom, Consumption, Hospitals, and Interest-rate proxies, 2) Continue to maintain positive view on Retail consumption plays, 3) Prefer certain capex-oriented plays that look attractive at this point due to the recent price correction as well as reasonable growth visibility in the domestic market in FY26, and 4) Maintain cautious stance on export-oriented sector due to tariff overhang and macroeconomic uncertainties,” suggested Axis.
Top Stock Picks for October
Reflecting these insights, Axis Securities updated its top picks for October 2025, adding Mahanagar Gas and booking profits in Varun Beverages.
Other recommended stocks include HDFC Bank, Bajaj Finance, Shriram Finance, Avenue Supermarts, State Bank of India, Lupin, Hero Motocorp, Max Healthcare, Kirloskar Brothers, Kalpataru Projects, APL Apollo Tubes, Bharti Airtel, Prestige Estates, and Sansera Engineering.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
