The Indian stock market has faced significant pressure since the US-Iran war began in late February, with the Nifty 50 declining around 6-7% during this period. According to reports from LiveMint, Brent crude has surged more than 52% to around $110 per barrel as of Tuesday, 19 May, while the rupee has weakened nearly 6% against the US dollar. The sustained decline reflects mounting stress on India's external position, with the pressure on the rupee increasing due to high crude imports, lacklustre capital inflows, and persistent selling by foreign portfolio investors of over $20 billion in Indian equities. The Strait of Hormuz has remained shut for more than 11 weeks, keeping energy markets anxious despite some recent developments.
Despite near-term challenges, Emkay Global maintains a bullish outlook on Indian equities, projecting the Nifty could reach 29,000 by March 2027 based on a target valuation multiple of 19.2 times FY28 earnings. In its latest India strategy report, the brokerage said India's macroeconomic resilience, improving earnings outlook, and continued policy support are likely to help markets weather near-term global volatility. Seshadri Sen, Head of Research and Strategist at Emkay Global, noted that while global geopolitical developments and elevated crude prices may create intermittent volatility, India's structural growth drivers remain intact. The brokerage expects nearly 14% cumulative earnings growth over the next two financial years, with the Nifty currently trading around 19.2 times FY27 forward earnings, close to its five-year average valuation.
While oil prices fell slightly after US President Donald Trump announced he had cancelled a planned strike on Iran at the request of Gulf allies, the ongoing uncertainty over the conflict continues to keep energy markets anxious. According to Emkay Global's scenario analysis, if Brent remains around $100 per barrel, India's current account deficit could widen to 2.4% of GDP from the earlier baseline estimate of 1.3%. In a more severe scenario where crude prices surge to $130 per barrel, Emkay estimates India's GDP growth could slow further to 5.5%, and inflation could rise to 5%. The brokerage described sustained high crude prices as a "four-way drag" on the economy because they simultaneously affect inflation, government finances, corporate profitability and household spending. However, the March quarter earnings season has started on a relatively stable note, with 46% of companies under Emkay's coverage delivering earnings above expectations, while only 29% missed estimates.
Emkay Global remains overweight on discretionary consumption, industrials, materials and real estate while staying underweight on financials, energy, healthcare, staples, telecom and technology in the near term. The brokerage has retained its FY27 Nifty earnings per share estimate at ₹1,230 and continues to expect nearly 13% earnings growth. Several domestic policy measures continue to support economic activity, including income tax cuts, GST reductions and cumulative RBI rate cuts of around 125 basis points since February 2025. Government spending on railways, defence and infrastructure also continues to support economic activity and employment generation. The NBFC sector has seen significant re-rating over the last few years due to better balance sheets, lower NPAs and stronger capital adequacy, with select NBFCs well-positioned to deliver healthy growth and profitability despite some moderation in outperformance versus banks.
According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, the Nifty 50 is currently witnessing a consolidation phase on the daily charts, with the index repeatedly defending the crucial 23,300 zone over the past week. As reported by LiveMint, this level coincides with the 50% retracement of the rally from the April low of 22,180 to the recent high of 24,600. Bhosale noted that the 23,300–23,100 zone remains a critical support area for the benchmark index, with the lower end aligning with the 61.8% retracement level, while the 23,850–23,900 range is likely to act as immediate resistance. Despite near-term pressures, Emkay believes the broader long-term growth story for Indian equities remains intact, with any sharp correction triggered by global concerns viewed as a long-term buying opportunity rather than a structural threat to India's growth outlook.
