Mumbai: The Nifty index could reach 25,000 by December 2025, driven by a revival in consumer spending, improved employment trends and easing foreign investor selling, a new report said on Tuesday.
According to Emkay Institutional Equities, the Indian stock market is expected to remain volatile in the near term, but a recovery is likely in the second half of 2025.
The research firm has projected that the first quarter of 2025 is likely to witness increased market fluctuations due to weak demand and global uncertainties.
However, from the second half of the year, a pickup in retail lending, better liquidity conditions, and government welfare spending are expected to support economic recovery and boost market sentiment.
“Markets tend to over-react and overextend on both, the upside and the downside,” said Nirav Sheth from Emkay Global Financial Services. He added that the bottoming process is usually volatile which we are currently witnessing.
“We estimate that the worst of the earnings downgrade cycle is behind us and expect a recovery in the second half of the fiscal – triggered by renewed government spending and tax relief led consumption spend. It is time to buy,” Sheth mentioned.
On a sectoral level, Emkay Institutional Equities maintains an Overweight stance on discretionary consumption, real estate, and healthcare. However, it remains cautious about financials, consumer staples, and materials due to valuation concerns and structural challenges.
The firm also noted that foreign portfolio investor (FPI) selling, which has been a major concern for the market, is likely to subside by the second quarter of 2025.
The weakening of the US Dollar Index (DXY) could also help stabilise the Indian rupee, further supporting market recovery.
Corporate earnings are expected to improve, with mid-teens growth projected for FY26, primarily driven by financials, metals, and energy stocks.
Emkay also pointed out that capex growth, which saw a strong 31 per cent CAGR between FY21-24, could slow to 10-13 per cent due to election-related spending constraints.
However, a rebound is expected in FY26 as policy clarity returns. Despite the short-term volatility, the report is optimistic about the Indian stock market’s long-term potential.
(IANS)
