According to ICICI Direct's latest Diwali strategy note for Samvat 2083, companies reporting Q2FY27 results have delivered more than 20% year-on-year growth in both revenue and profit after tax (PAT). The brokerage highlighted that mid- and small-cap companies have performed particularly well, with profit growth exceeding 30% year-on-year. Kotak Neo also pointed to improving earnings momentum, noting that Nifty 50 companies recorded their strongest year-on-year earnings growth in 11 quarters during Q1FY27. The brokerage expects this momentum to continue, projecting Nifty 50 earnings growth of around 18% in FY27 and 13% in FY28. Raamdeo Agrawal, Chairman & Co-Founder of Motilal Oswal Financial Services, has now raised his Nifty earnings growth projection to 30%, noting that "every economist is wrong in last four quarters in anticipating what is going to the growth."
According to CNBC TV18, Amit Jeswani, Founder and CIO of Stallion Asset Management, believes the Indian equity market is very close to the bottom after a difficult period. Jeswani expects the Nifty could find strong support around the 20,000 mark, barring a sharp spike in crude oil prices. He believes improving corporate earnings, strong GST collections and more reasonable valuations could support a recovery in the coming months. The next leg of the bull market will depend on the emergence of companies capable of delivering earnings growth of 30-40%, which could attract foreign institutional investors back to Indian equities. After the recent correction, valuations have become more reasonable, with the Nifty 50's two-year forward price-to-earnings (P/E) ratio standing at 16.6 times, below its 10-year average of 18.2 times. Agrawal emphasizes that assuming inflation remains steady at 3-4%, the market offers a highly attractive compounding opportunity with limited downside risk.
According to CNBC TV18, Devang Mehta, Deputy MD & CIO-Equity at Spark Capital Private Wealth, projects 18% to 25% growth in capital market stocks over the next three to five years. Mehta advocates a market-cap agnostic approach, leaning towards broader markets rather than large-cap stocks. He notes that largecap stocks have become inexpensive over the past two to three years, but earnings growth in heavyweights across banking, IT, oil and gas, and fast-moving consumer goods has been highly polarised. Jeswani agrees, emphasizing that investors should focus on corporate earnings rather than short-term stock price movements. Looking ahead, ICICI Direct expects corporate earnings growth to play a bigger role in driving stock market returns, rather than gains fuelled primarily by liquidity or higher valuation multiples. Agrawal notes that the long-term market return over a five to ten-year horizon directly mirrors earnings growth, with price-to-earnings multiples typically fluctuating between 18 and 20 having only a marginal impact of 1% to 2%.
According to CNBC TV18, the macroeconomic landscape has shifted significantly over the past two to three quarters, with credit flow rebounding to 19% to 20% from previously dropping below 10%. This resurgence, combined with GST reductions, has boosted consumption and pushed economic growth to between 7.5% and 8%. Agrawal highlighted that Nifty earnings are looking to be around 30%, supported by a recovery in the economy, stronger credit flow and recent goods and services tax cuts. The corporate profit pool is expected to expand significantly, potentially doubling from around ₹33 lakh crore to ₹66 lakh crore, though this growth will not be evenly distributed with companies using technology effectively likely to capture a larger share. Several global headwinds are also showing signs of easing, with geopolitical tensions involving Iran potentially resolving within a year, potentially allowing crude oil prices to fall back to a more comfortable $70 to $75 per barrel range.
On the institutional front, foreign institutional investors have heavily sold Indian equities, offloading ₹3 lakh crore annually over the past two years and an estimated ₹4.5 lakh crore in the current period. This sustained selling has reduced foreign ownership from 21%. However, Agrawal notes that a reversal in foreign institutional sentiment could dramatically alter market dynamics, explaining that "if I say no, I don't want to sell India, I want to buy India, I want to build up India, I want to take it from 11% to 15%, 17%, then I think it will be very interesting to see what happens in the market." Currently, market supply stems primarily from foreign offloading, promoter stake sales and initial public offerings. However, a reversal in foreign institutional sentiment could change this supply equation, as the segment which previously supplied up to 60% of the equity could soon alter the dynamics.
According to CNBC TV18, Jeswani believes artificial intelligence (AI) and software-led business models will play a significant role in wealth creation over the coming years. He explained that businesses can create wealth through four forms of leverage: people, capital, code and networks, of which code, or software, has become the biggest driver of incremental wealth creation globally. India may not necessarily be at the forefront of developing AI technology, but its entrepreneurs could benefit by adopting it across industries. He expects India's corporate profit pool to expand significantly, potentially doubling from around ₹33 lakh crore to ₹66 lakh crore, though this growth will not be evenly distributed with companies using technology effectively likely to capture a larger share.
