Indian equity markets could scale back to their all-time highs in the current financial year, with the benchmark Nifty 50 potentially revisiting the 26,000-plus mark, said Dhiraj Relli, managing director and CEO of HDFC Securities.
Speaking at the firm’s annual market outlook event, Relli said the recent 18-month correction has reset valuations, creating room for an upward move, possibly closer to the festive season, though the exact timing remains uncertain.
The brokerage remains constructive on Indian equities, with expectations of double-digit earnings growth and relatively stable macroeconomic conditions.
While earlier projections of 14–15 per cent earnings growth have been moderated, estimates of 10–12 per cent growth are still seen as healthy and more broad-based across sectors.
Global factors, however, continue to weigh on sentiment. Currency volatility, particularly dollar strength, and geopolitical tensions, especially in West Asia, have introduced uncertainty. Relli said the current environment is highly volatile, with cascading effects on inflation, interest rates and corporate earnings globally.
Even so, India is viewed as relatively resilient. The downside risk for equities is estimated to be limited, while upside potential remains meaningful, suggesting a favourable risk-reward balance.
Domestic investors are expected to play a key role in the next leg of the rally, with mutual funds holding significant cash reserves, and early signs of rotation towards large-cap and higher-quality stocks being visible.
Sectorally, banking, IT, industrials and real estate are witnessing improving risk-reward dynamics. Structural themes such as manufacturing and infrastructure also remain in focus, supported by policy push and domestic demand, the brokerage said.
With macro fundamentals intact and valuations turning reasonable, the market is increasingly being seen as favourable for stock-specific strategies rather than broad-based rallies, Relli said.