According to Axis Capital, the Nifty 50 is expected to trade in a defined range of 23,000 on the lower side and 24,500 on the upper side in the near term. As per Raman Jauhar, Managing Director and Head of Equities at Axis Capital, markets are likely to remain range-bound as earnings risks and macro uncertainty build. The recovery from market lows has been sharper than anticipated, with Nifty up about 8% and broader market indices gaining 15-18%, though Jauhar notes that part of this rally was triggered by short covering driven by aggressive shorts, making sustainability dependent on stronger triggers.
According to latest reports from Emkay Global, petrol and diesel prices could rise by ₹18-20 per litre over the next 3-6 months if crude oil prices remain above $100 per barrel for the next two to three quarters. India's crude basket is currently trading around $110 per barrel, with under-recoveries for oil marketing companies estimated at approximately ₹18-20 per litre for petrol and diesel, even after the ₹10 per litre excise duty cut announced on March 27, 2026. The brokerage estimates that a 10% increase in retail fuel prices strikes a balance between alleviating OMC losses and containing consumer impact, while noting that fuel prices have remained unchanged since 2022. Emkay expects several sectors to face headwinds from higher fuel prices, with the inflationary impact estimated at approximately 75 basis points, including second-order effects.
The macro volatility in crude oil markets is creating significant pressure on earnings expectations. As per Axis Capital, April saw about 1.2% earnings per share (EPS) downgrades, with Jauhar warning of a broader and consumer-led downgrade cycle ahead. The crude oil price volatility has been particularly concerning, with crude touching $90 per barrel and then retreating back to around $110 per barrel, making markets nervous about sustained price movements. This volatility is feeding into earnings expectations across sectors, with analysts expecting pressure to widen as the downgrade cycle progresses.
The recent rally in the Nifty 50 appears to have factored in a US-Iran ceasefire scenario while overlooking the persistence of elevated energy prices. According to reports from Emkay Global, the Nifty 50 index is currently trading at an FY27E price-to-earnings multiple of 19.5x, with the discount to its long-term average largely narrowing. The brokerage believes that stretched valuations, coupled with the possibility of a fuel price hike due to higher crude oil prices, could trigger a short-term correction. While analysts remain optimistic about a potential US-Iran peace deal, Emkay Global has flagged emerging risks to the market's near-term trajectory.
The divergence between domestic institutional investors (DIIs) and foreign portfolio investors (FPIs) has widened significantly, with the gap in BSE 500 holdings increasing by 90 basis points to 154 basis points. This trend was driven by FPI outflows of $14.2 billion in Q4FY26, as reported by Emkay Global. Sectorally, FPIs have cut weights in Financials and Technology, and reallocated to Materials, Industrials, and Healthcare. The brokerage expects FPIs to pause their aggressive selling through the remainder of 2026, although a meaningful resurgence in inflows may be contingent on valuation moderation.
The Indian stock market witnessed a steady recovery in April, with the benchmark Nifty 50 rebounding nearly 9% from the lows of April 2. However, Axis Capital cautions that the ongoing rally may lose momentum in the short term, with downside risks emerging if the Strait of Hormuz situation remains unresolved over the next 7–10 days and fuel price hikes materialize. The brokerage remains confident about the FY27/FY28 earnings recovery, though it expects Q1FY27 to be soft with approximately 7% of their coverage universe missing forecasts so far. Despite current pressures, the brokerage views the energy shock as transitory and expects policy measures to cushion the impact on consumers.
Emkay Global has added ICICI Prudential Asset Management Company Ltd to its model portfolio, citing the long-term structural growth in capital markets. The firm expects retail participation in equities to continue expanding over the coming years. The portfolio remains aligned with a base case of normalising crude oil prices, with the brokerage choosing not to recalibrate its positioning in response to short-term developments such as potential fuel price hikes, maintaining a long-term perspective amid near-term volatility.
