Axis Securities has released its latest market outlook and top stock recommendations for July 2025. The brokerage highlighted improving macroeconomic indicators, supportive policy measures, and reduced global volatility as key drivers of India’s equity market. With expectations of a stronger FY26, Axis Securities continues to prefer quality stocks in high-growth sectors.
Axis Securities maintained its March 2026 Nifty target at 26,300, valuing the index at 20x FY27E earnings. In a bull case, the index could reach 27,600, assuming a soft landing in the US, stable policy, and strong domestic growth. Conversely, a bear case target of 22,300 is pegged on assumptions of prolonged global headwinds, high inflation, and slower global trade recovery.
The brokerage upgraded its base case multiple from 19x to 20x due to the inclusion of high-PE stocks in the Nifty 50. It remains optimistic on India’s long-term growth potential and expects capital inflows to strengthen as uncertainties fade.
Bull and Bear Case Scenarios
In the bull case scenario, Axis Securities values Nifty at 21x FY27 earnings, projecting the index at 27,600 by March 2026. This is based on assumptions of policy continuity, fiscal prudence, and a boost in private capex alongside a successful soft landing in the US.
The bear case, meanwhile, assumes 17x earnings, valuing the index at 22,300. This would play out if policy uncertainty under the Trump regime resurfaces, inflation continues to trouble developed markets, and global recession risks remain elevated.
Top Picks Basket Outperforms Nifty 50
Axis Securities said its “Top Picks Basket” outperformed the Nifty 50, delivering a 9.7 percent return in the last three months compared to the benchmark’s 8.5 percent gain. Over the past month alone, the basket gained 3.7 percent. Since inception in May 2020, the basket has surged 336 percent, significantly outperforming the Nifty 50’s 175 percent return during the same period, Axis Securities noted.
In line with its strategic allocation, Axis Securities recommended the following stocks for July: HDFC Bank, Bajaj Finance, Shriram Finance, Avenue Supermarts (DMart), State Bank of India (SBI), Lupin, Hero MotoCorp, Max Healthcare, Colgate, Kalpataru Projects, APL Apollo Tubes, Varun Beverages, Bharti Airtel, Prestige Estates, and Sansera Engineering. These stocks were chosen for their strong fundamentals, earnings visibility, and potential to benefit from India’s domestic growth cycle.
The brokerage recently exited ICICI Bank and included Bajaj Finance, citing a tilt toward interest rate-sensitive names. It expects the earnings season and management commentaries to offer more clarity on sectoral strength.
Strong Domestic Outlook Despite Global Risks
According to Axis Securities, India’s domestic economy remains resilient. The brokerage expects FY26 to outperform FY25, aided by a combination of RBI rate cuts, improved bank liquidity, and increased government spending. Notably, the brokerage pointed to a 50 bps CRR cut in December 2024, a front-loaded 100 bps rate cut in June 2025, and RBI dividends as signs of pro-growth support. Axis Securities believes India is well-positioned to weather global uncertainties.
Style and Sector Rotation in Focus
Axis Securities observed that the Indian equity markets are showing signs of style and sector rotation. While large caps have shown strength, the risk-reward profile for mid- and small-caps is gradually improving. Recovery in these segments will be gradual, driven by earnings expectations, improving liquidity, and macro stability.
The brokerage emphasized investing in quality stocks, monopolies, and market leaders with a domestic demand focus. It continues to overweight BFSI, Telecom, Consumption, Hospitals, and interest rate proxies. It is also selectively positive on FMCG and retail consumption based on expected recovery in FY26.
Q1FY26 Earnings to Set the Tone
Axis Securities said that Q1FY26 earnings and management guidance will be crucial in shaping market direction. While domestic sectors are expected to post strong performance, export-oriented industries may face continued pressure. The brokerage expects Nifty earnings to grow at a 14 percent CAGR over FY23–27, with financials driving most of the growth. It also cited improving credit offtake and domestic consumption as key earnings enablers.
The firm added that the consumption theme may see some impact from early monsoon and geopolitical tensions, but it expects the upgrade/downgrade ratio to improve as the year progresses.
Key Risks and Valuation Support
Axis Securities acknowledged that Indian market valuations remain elevated compared to other emerging markets. However, it believes this is justified by strong earnings growth, policy support, and structural domestic demand.
While global trade and currency dynamics will continue to pose risks, the brokerage said that most of the market headwinds have been priced in. As a result, it sees a limited downside risk in the near term, especially with the onset of earnings season and expected positive management commentary.
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.
