The Indian stock market has been under pressure this year, with the benchmark Nifty 50 falling more than 10% in 2026 so far, weighed down by the prolonged Iran-US war, surging crude oil prices and weak earning growth. Amid this backdrop, PL Capital has cut Nifty 50 target to 26,449 from 27,080 earlier, but expects the markets not to correct further.
Nifty 50 is currently trading at 16.5x 1-year forward EPS, which is at 13.6% discount to 15-year average PE of 19.1x and is at a discount of 18.7% to 10-year average PE of 20.3x, PL Capital noted. It its base case, it values at 10% discount to 15-year average PE of 17.2x with FY28 EPS of ₹1,538 and arrives at 12-month target of 26,449 as compared to 27,080 earlier.
“Although markets are unlikely to show significant correction to breach recent lows, prolonged geopolitical uncertainty can further add to sharp swings,” PL Capital said in a report.
In its bull case, the brokerage firm values Nifty 50 at PE of 19.1x and cut its bull case target to 29,387 from 30,089 earlier. Its bear case assumes the index can trade at lowest point of PE during the eurozone crisis in 2013 at 13.5x and arrives at a target of 20,771 which would likely assume a worst-case scenario in current context.
“We believe India would have significant spike in subsidy for fertilizers, food and fuel and loss of excise on petroleum products, which could put an incremental fiscal burden of ₹4-5 lakh crore. We don’t rule out the possibility of hike from 2H27. Balance of trade including services remain comfortable, however sustained FII selling, pressure on remittances and crude spikes are placing the currency under stress,” PL Capital said in a report.
Sectors in focus
PL Capital believe Private banks, NBFC, Metals, capital goods, defence, Data centres, Renewables, Railways, Ports, Ship Building, Semiconductors and Healthcare are themes to play.
It remains cautious on IT Services, Consumer, Chemicals, Agri and Oil and Gas.
Model Portfolio
The brokerage firm retained underweight stance on IT Services, Auto, Consumer and Oil and Gas. It is overweight on Banks, Capital Goods, Diversified Financials, Metals, Healthcare, Telecom and Ports.
PL Capital cut its weights on Auto, banks, Consumer, Healthcare and IT Services, while increasing weights on Metals, Capital Goods and Engineering/ defence, NBFC, AMC’s, telecom and Ports.
In its model portfolio, PL Capital added HDFC Asset Management Company. It also added weights on , JSW Steel, Larsen & Toubro, , , Nestle India, Bajaj Finance, and Adani Ports & SEZ, while reducing wight on Mahindra & Mahindra, , Titan Company, LG Electronics India, and Infosys.
High Conviction Picks
PL Capital removed Ipca Laboratories, , Apeejay Surrendra Park Hotels, Mahindra & Mahindra and from high conviction picks, while it added , DOMS Industries, Rainbow Children Medicare, and Jindal Stainless in high conviction picks.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.