“We see it as a strong positive for India and expect the Nifty to rebound after a 5% collapse in the last three trading sessions”, the brokerage said in a report on Tuesday. The domestic brokerage expects Brent to retrace to $75-80 per barrel, once clarity emerges.
Emaky says the recent correction marks a bottom for the markets and retains its December 2026 Nifty target of 29,000, based on a +1 standard-deviation P/E multiple of 20x. The disruption appears short-lived and is unlikely to derail India’s consumption-led recovery, with FY27E Nifty EPS growth still expected at around 15%.
The Nifty has declined 5% over the past three trading sessions, largely driven by sustained FPI outflows of about $2.5 billion. However, this trend is expected to reverse, with India likely to re-emerge as one of the more attractive investment destinations in the region. Key triggers include easing crude price pressures and a moderation in valuation premiums. The improving outlook could extend across asset classes.
The rupee is expected to recover to pre-war levels of around Rs 91 per dollar, while the 10-year bond yield may ease to about 6.65% from the current 6.83%. While the broader economy may take 2-3 months to stabilise, financial markets are likely to price in the peace dividend much sooner.
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In today’s session, markets rebound smartly. Sensex gained 1,353 points, while Nifty 50 gained around 420 points to hover near 22,950. The sharp gains added more than Rs 7 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to nearly Rs 423 lakh crore.
Who will lead recovery?
For the recovery, Emkay prefers names that have seen the sharpest corrections since February 26. These include OMCs, where a shorter conflict implies manageable earnings impact, and valuations remain below long-term averages on a PBV basis.
Larsen & Toubro has declined 22% despite limited damage to its Middle East exposure. HDFC Bank is down 16% and appears to have overreacted to the chairman’s resignation, now trading near 1.5x PBV.
Bajaj Finance has also corrected 16% with minimal earnings impact, while SHFL has fallen 19% on concerns around fuel price hikes. IndiGo is down 18%, but a correction in ATF prices and schedule normalisation over the next 2-3 months should support recovery.
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Ashok Leyland, down 23%, has been weighed down by fears of diesel price hikes, which now appear less relevant.
At the same time, some of the recent “protection” trades could unwind. Stocks like IT, Reliance and ONGC may face relative downside as risk appetite returns.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)