Nifty's Unpredictable Future: Swinging Between Risks and Opportunities

BofA Securities has released a report projecting that the Nifty index of the National Stock Exchange (NSE) could oscillate between a decline of 11% and a rise of 4% from its year-end target of 25,000. This forecast considers a variety of macroeconomic risks, such as potential trade tariffs, changes in the US economic landscape, and central bank policy decisions by the Federal Reserve and the Reserve Bank of India (RBI).

The report highlights key risks that may obscure market visibility, including the imposition of US trade tariffs on Indian goods, an uncertain macroeconomic scenario in the US, and both delayed and inadequate fiscal and monetary policy responses. The outcome of state elections in six major Indian states, accounting for over 16% of India's public expenditure and capital investments, also adds to the market uncertainty.

Despite maintaining a target of 25,000 for the Nifty index by year-end, BofA Securities anticipates subdued earnings growth, with forecasts of 7% for FY26 and 11% for FY27. These figures fall short of market expectations of 9% and 15%, respectively. Furthermore, as each earnings season approaches, the market could experience corrections rather than enduring rallies. However, if India executes timely legislative or fiscal reforms—facilitated by enhanced RBI dividends, asset sales, fuel duties, or investment-driven projects—the outlook may improve. Public data shows that both the Nifty and the BSE Sensex have not met performance expectations, experiencing their deepest losing streak in over two decades.

(With inputs from agencies.)