The brokerage noted that valuations in the broader Indian market remain elevated. It also cautioned that further reductions in earnings estimates cannot be ruled out, given current growth challenges, weakening consumer demand, persistent inflation, and ongoing risks of disruption.
On a positive note, Kotak Securities belives that the Bharatiya Janata Party’s (BJP) impressive victory in the recent Maharashtra elections, following its earlier win in Haryana in October 2024, is expected to result in continuity of the Central government’s development agenda.
The brokerage sees limited overall fiscal consolidation, an increase in Central government capital expenditure in the second half of FY25, and a short-term boost in market sentiment.
Additionally, Kotak Securities said the focus is more on execution, instead of any new reforms or stimulus measures.
In a recent note, foreign brokerage house Goldman Sachs said that it expects the Indian markets to remain range-bound over the next three months, with a target of 24,000 for a back-loaded recovery, as growth picks up.
Howevere, the brokerage expects the Nifty to reach the 27,000 mark by the end of 2025, supported by underlying earnings growth estimates of 13% and 16% over the next two years. The Nifty50 has fallen 10% from the record high level of 26,277 that it had made on September 27 this year.
According to Goldman Sachs, the Indian stock markets currently have an external immunity; however, there is a cyclical slowdown in domestic growth. Therefore, weak earnings coupled with high valuations are expected to keep the markets range-bound in the near term.
Meanwhile, Indian shares saw a gap-up opening on Monday. Benchmark indices Nifty and Sensex opened over 1% higher, led by investor optimism following the BJP-led Mahayuti alliance’s victory in the Maharashtra elections.
The Nifty jumped 413 points, or 1.73%, and are currently trading at 24,321.
Following the recent correction, both Nifty and Sensex have risen nearly 4% over the last two trading sessions.
