Axis Securities revised its Nifty 50 target upward to 26,300 for March 2026, citing robust earnings visibility, improved market sentiment, and strong macroeconomic fundamentals. The brokerage said that while the broader market witnessed significant recovery post the lows of February 2025, near-term consolidation is likely due to global economic uncertainties. The firm maintained a bullish outlook on domestic-facing sectors, while advising caution on export-oriented businesses in the wake of ongoing global trade policy shifts.
“India remains a haven amidst global volatility, and with supportive domestic cues, we believe the Nifty is poised to deliver double-digit returns over the next 2–3 years,” Axis Securities said. While near-term consolidation is likely, the focus will remain on selectively positioning in largecap, domestically-driven sectors that offer better risk-reward in the current climate.
Market Recovery and Broader Trends:
According to Axis Securities, the Indian equity market experienced a notable rebound starting March 2025. The Nifty 50 gained 12 percent from its February lows, while the Midcap and Smallcap indices surged by 20 percent and 22 percent, respectively. The rally was attributed to factors such as Q4FY25 earnings aligning with expectations, positive trade agreements, easing geopolitical tensions, and a supportive macroeconomic setup for FY26. The last one month alone saw the Smallcap index rising 9.6 percent, the Midcap index up 6.1 percent, and the Nifty 50 inching up by 1.7 percent. “The market breadth improved substantially in the last three months,” Axis Securities said.
Macroeconomic Risks and Strategy Shift:
Despite the rebound, Axis Securities noted the presence of lingering macroeconomic challenges, including trade policy uncertainty with the US and China, slowing global growth, movement in US 10-year bond yields, and volatility in the dollar index. “These risks will influence market direction and valuations in the short term,” the brokerage said, adding that markets may consolidate in the near term with narrow participation. Axis said it is adopting a strategy focused on style and sector rotation, especially favouring domestic-facing sectors, given their insulation from reciprocal tariffs.
Valuation and Sector Preferences:
Axis Securities pointed out that largecaps offer better value compared to the broader market, where the margin of safety is currently lacking. “We believe quality stocks, market leaders, and monopolies from domestic-oriented sectors are well-positioned to outperform,” Axis Securities said. The brokerage is overweight on largecap private banks, telecom, consumption, hospitals, and interest-rate proxies. It also upgraded its view on retail consumption and FMCG stocks based on FY26 recovery expectations. Meanwhile, it continued to underweight IT stocks due to expected US discretionary spending cuts.
Portfolio Changes and Tactical Adjustments:
Reflecting shifts in market style and risk appetite, Axis Securities made one change in its top picks—booking profits in Dalmia Bharat and adding Sansera Engineering. “This reflects our tactical pivot towards higher-quality plays amidst ongoing market transition,” the brokerage noted.
Nifty Target Roll-Over and Valuation Framework:
Axis Securities rolled forward its Nifty target to March 2026, raising it to 26,300. The upward revision is based on improved market sentiment, easing tariff concerns, and better earnings prospects for FY26. “We now value the Nifty at 20x Mar’27 earnings, up from 19x earlier, factoring in favourable index changes like the inclusion of Britannia and BPCL,” Axis Securities said. It expects Nifty earnings to grow at a CAGR of 14 percent over FY23–27, driven largely by financials.
Bull and Bear Case Scenarios:
In a bull-case scenario, Axis Securities sees the Nifty touching 27,600 by March 2026, valuing it at 21x Mar’27 earnings. This outlook is predicated on a “Goldilocks” environment with reduced global volatility, a soft landing for the US economy, and a revival in private capex under a stable policy regime. Conversely, in the bear case, Axis pegs the Nifty at 22,300, based on a 17x valuation multiple. “Challenges such as high interest rates, currency volatility, and trade disruption from potential Trump-era policies could drag down valuations,” Axis Securities warned.
Top Stock Picks:
Aligned with its revised market strategy, Axis Securities recommended a diversified portfolio comprising domestic-facing plays and quality names. Its top picks include HDFC Bank, ICICI Bank, Shriram Finance, Avenue Supermarts, State Bank of India, Lupin, Hero MotoCorp, Max Healthcare, Colgate, Kalpataru Projects, APL Apollo Tubes, Varun Beverages, 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.
