Emkay ups Nifty Sept 2025 target to 26,000; 'extended' sideways move likely

Emkay Global has raised the Nifty50 target to 26,000 for September 2025 on the back of rate cuts, revival in rural consumption, and earnings growth

Emkay Global on Nifty50 target: Emkay Global has increased its Nifty50 index target to 26,000 for September 2025, up from 22,000 seen for June 2025. The revision comes amid hopes of interest rate cuts by the US Federal Reserve, along with a possible revival in rural and mass consumption back home. 

"We raise the target Nifty price-to-earnings ratio (PER0 to 22x (+1sd) from 19x and our index target to 26,000 from 22,000 – We roll over to Oct-25. The upside on the Nifty is limited to 4 per cent, and we see an extended period of sideways movement," Emkay Global said in a note on Monday.

The brokerage is 'Overweight' on IT as it sees the US rate cuts portend earnings upgrades, despite the elevated valuations.

It has raised Energy to 'Overweight', but has cut FMCG and materials to 'Neutral', despite a positive operating environment.

On financials, Emkay remains 'underweight' as it is structurally negative on the sector due to weak growth. Further, it retains 'Overweight' on healthcare and durables, and 'Underweight' on metals.  

Why has Emkay raised the Nifty50 target to 26,000?

Rate cut by US Fed, RBI

The brokerage believes that a rate cut by the US Fed is inevitable and the Reserve Bank of India (RBI) will follow suit, with a strong chance of a front ending in October or December. This, as per Emkay, will be accompanied by a change in the liquidity stance.

Further, after the rate cut, at the margin, Autos, Real Estate, and Non-Banking Financial Companies (NBFC) will benefit, while IT will gain from the US optimism.

Revival in rural and mass consumption

The brokerage sees early signs of revival in mass and rural consumption, against a backdrop of weak aggregate demand. The claim is based on management commentary, the latest Nielsen trends, a step-up in welfare spending by states, and falling inflation.

With premium consumption struggling in H2FY24 and early signs of revival in mass and rural consumption, stocks are anticipated to have priced by the time the actual data is visible. 

The brokerage suggests playing this trend, with FMCG, despite elevated valuations. Value retail could be another beneficiary.

Earnings growth and valuations

Another reason for raising the Nifty target is continued double-digit earnings growth, with no material consensus downgrades.

"Behind the disappointing headline Q1FY25 numbers, the granular dispersion was strong (36.9 per cent of companies reported more than 25 per cent PAT growth)," the brokerage said.

It added a derisked macro with unprecedented financial stability has helped lower risk perception (India Certificates of Deposit is down by 44 basis points over the last 12 months).