The Indian stock market has seen notable fluctuations since the beginning of the month with both Sensex and Nifty ending the week in red. Amid concerns over valuations and market fatigue, the brokerage firm Nomura anticipates a modest return outlook for 2025. They expect the Nifty to go up about 5% from current level by December.
Nomura’s Market Outlook: Cautious approach recommended
Looking ahead, the brokerage firm, Nomura expects Nifty to reach 23,784 by December 2025, based on 18.5 times December 2026 estimated EPS of Rs 1,286. However, the report also suggests that the index could fluctuate between 21,800 and 25,700, implying a -5 to 12% return from current levels. This Nifty level implies a 5% upside for the benchmark Index.
According to the brokerage firm report, the Indian equity market has seen a 16% decline in dollar terms from its peak in September 2024 as of February 2025. Midcap and smallcap stocks have been hit even harder, falling 21% and 23%, respectively.
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The brokerage in its report further noted that this correction to “market fatigue after the strong run, when expectations were set high.” Valuation multiples for the Nifty 50 have fallen to 19 timed one year forward earnings, down from 21.3 times at the peak in September 2024.
Nomura on Sectoral preferences
The brokerage further in its report noted some sectors with stable earnings growth while avoiding overvalued stocks.
As per the brokerage report, sectors with overweight (OW) ratings include Financials, Consumer staples/FMCG, Oil and gas, Telecom, Power, Pharma, Internet, and Real estate.
On the other hand, sectors with Underweight (UW) ratings in its report include Consumer discretionary, Autos, Capital goods, Cement, Hospitals, and Metals.
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In its latest update, Nomura has added Axis Bank to its preferred stock portfolio for India, removing Nippon Life India Asset Management, Hyundai, and GE Vernova T&D India. On the least preferred list, it has included Voltas and ABB, while removing Maruti Suzuki India and Havells India. Furthermore,
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