Prabhudas Lilladher has reduced its Nifty 50 target to 26,449 from the previous 27,080, as reported by The Economic Times. The brokerage expects markets to remain range-bound with limited further downside, though prolonged uncertainty could trigger sharp swings. According to the latest 'Strategy' report, Nifty has crashed more than 7% in the past two months and over 15% from its 52-week high due to the ongoing Iran-US war and El Nino conditions. The current target implies an upside potential of nearly 14% from current levels.
The domestic brokerage highlighted that while Indian economy has not shown any brakes on the growth trajectory, fissures have started showing up due to rising geopolitical risks and India's foreign dependence. As reported by The Economic Times, India's reliance extends beyond crude oil to essential commodities including fertilizers, rare earths, semiconductors and critical technologies. The skyrocketing oil prices due to global supply chain disruptions have resulted in higher prices across petrol, diesel, LPG, FMCG, dairy, chemicals, durables and auto sectors. PL Capital believes the full impact of higher essentials, El Nino and rising inflation has the potential to curtail consumption demand from the second quarter (July-September) of the ongoing FY27.
According to The Economic Times, NIFTY is trading at 16.5x 1-year forward EPS, which represents a 13.6% discount to 15-year average PE of 19.1x and an 18.7% discount to 10-year average PE of 20.3x. The brokerage values NIFTY at 10% discount to 15-year average PE of 17.2x with FY28 EPS of 1,538, arriving at the revised 12-month target. This valuation methodology supports the reduced target price despite current market challenges.
As reported by The Economic Times, Prabhudas Lilladher maintains an underweight stance on IT Services, auto, consumer and oil & gas sectors, while remaining overweight on banks, capital goods, diversified financials, metals, healthcare, telecom and ports. The brokerage is cutting weights on auto, banks, consumer, healthcare and IT services while increasing weights on metals, capital goods and engineering/defence, NBFC, AMC's, telecom and ports. The revised model portfolio includes large-cap picks like Bharti Airtel, Britannia Industries, ICICI Bank, Kotak Mahindra Bank, L&T, Shriram Finance and Titan Company, along with small and mid-cap stocks such as Ajanta Pharma, CESC, DOMS Industries, HealthCare Global Enterprises, Ingersoll-Rand (India), Jindal Stainless, JSW Infrastructure, KEI Industries and Rainbow Children's Medicare.
