Kotak Institutional Equities projects Nifty-50 earnings growth of 18% in FY2027E and 13% in FY2028E, demonstrating resilience despite macroeconomic pressures. According to the latest Kotak report, second-quarter net profits of the Nifty-50 Index stood 1.7% above brokerage estimates with a 19% increase compared to the corresponding period of the previous year. The report noted that across the broader Kotak coverage universe, net profits tracked 5% above estimates, advancing 22% year-on-year based on results declared so far. As per The Economic Times, the analysts expressed comfort from limited downgrades to FY2027-28E earnings estimates in the past few months and strong Q1/Q2FY27 results, despite early corporate earnings delivering positive surprises.
ICICI Bank has been assigned a 'Buy' rating by Kotak Neo with a current market price of ₹1,403 and fair value of ₹1,800. According to reports from Business Standard, the bank demonstrated strong performance in Q2FY27 with advances growing 30% YoY to ₹18.3 lakh crore. The domestic loan book expanded 23%, led by business banking (+34%), corporate loans (+31%), and retail and rural loans (+15%). Net profit grew 20% YoY supported by 18% growth in net interest income and 19% growth in pre-provision operating profit. The bank maintained superior asset quality with gross NPA ratio at 1.2% and net NPA ratio at 0.3%.
FSN E-commerce Ventures (Nykaa) has been assigned an 'Add' rating with a current market price of ₹330 and fair value of ₹370. As reported by Business Standard, the company is positioned as India's leading omnichannel beauty, personal care, and fashion retailer with strong consumer franchise and omnichannel presence. Nykaa reported robust Q2FY27 business momentum with broad-based growth across Beauty & Personal Care and Fashion segments. The company is expected to deliver healthy ~27% revenue CAGR over FY26-29E, led by sustained momentum in BPC business and rapid Fashion scale-up. Earnings growth is projected to outpace revenue growth with ~90% PAT CAGR over FY26-29E, driven by higher operating leverage and growing contribution from owned brands.
Geopolitical friction and energy volatility have shifted market dynamics away from small and mid-cap shares toward large-cap counters, according to the Kotak report. The stalemate in the Iran-US war, high and rising crude oil prices and related macro headwinds may have punctured the euphoria in the SMID segment of the market and pushed investors toward large-cap stocks. As noted by The Economic Times, elevated crude oil prices above ₹120 continue to exert disproportional pressure on the economy, with crude prices maintaining a significant bearing on key macroeconomic metrics. The report highlighted that heightened volatility in mid-cap and small-cap stocks is largely driven by key global events including the US Federal Reserve's policy outcome and upcoming elections in Israel and the US. Many market investors are taking cues from stock prices instead of their value, which has resulted in "euphoria and despair" according to Kotak.
The Kotak report identified three potential triggers required for the domestic market to overcome its current weakness: a durable resolution to geopolitical conflicts alongside normalization in crude prices, solid earnings prints to reinforce outlook visibility, and a behavioural pivot from price tracking to valuation metrics. According to The Economic Times, a decent earnings print for Q2 FY2027 can provide more confidence about earnings outlook and valuations, while a reduction in or removal of capital gains tax for equities would certainly shore up sentiment, although this looks unlikely. The brokerage noted that crude prices have a large bearing on India's major macroeconomic parameters, given that India is the second largest importer of crude oil. A shift in the market's focus to value and valuations from price and flows represents another trigger for recovery. In its latest portfolio strategy, Kotak moved Mankind Pharma from mid-cap to large-cap space and trimmed positions in HDFC Life, ICICI Bank and Infosys, while increasing weight on Reliance Industries.
