Nomura raises Nifty target to 26,140 for March on strong domestic cues

Despite a slowdown in corporate earnings growth, favourable domestic macroeconomic conditions are supporting Indian equity valuations, prompting Nomura to raise the Nifty target to 26,140 for March 2026, implying a 6 per cent upside from current levels. 

The revised target, up from 24,970, reflects a higher valuation multiple of 21x FY27 earnings estimates (previously 19.5x), driven by stable macros, including low bond yields and consistent domestic investment flows.

 

“The Indian equity markets have been resilient in the recent past despite corporate earnings estimate cuts and global uncertainties. We think positive domestic macros, as reflected in the significant fall in yields and the relatively lower beta of Indian equities underpinned by consistent domestic flows, are supporting market valuation. The performance of global equity markets despite trade-related uncertainties implies that equity risk premiums remain low,” said Saion Mukherjee, head of India equity research, Nomura, in a note. 

 

Earnings growth decelerates in 4QFY25 

An analysis of 223 companies in Nomura’s BSE 200+ coverage universe showed a 10 per cent year-on-year growth in aggregate profit after tax (PAT) for 4QFY25, surpassing consensus estimates by 6 per cent. While more companies beat expectations than missed, consensus earnings estimates for FY26 and FY27 have been revised downward by 2.3 per cent and 1.4 per cent since March 2025, and by 7.6 per cent and 6.3 per cent since September 2024, respectively.

 

Mukherjee cautioned that further earnings cuts of 4–8 per cent for FY27 are likely, as the corporate earnings-to-GDP ratio nears its peak, limiting outperformance relative to nominal GDP growth.

 

The brokerage noted that FY25 earnings growth has slowed to 8 per cent. Meanwhile, consensus projections indicate a recovery to 12 per cent in FY26 and 15 per cent in FY27.

 

According to Nomura, potential headwinds to earnings include a weak investment cycle, government fiscal consolidation, declining household financial savings, and subdued export demand. These challenges may be partially offset by lower oil prices, inflation, and interest rates. 

 

Sector picks 

Nomura favours domestic-focused sectors over exporters due to global trade uncertainties. Sectors with a favourable outlook include financials, consumer staples, autos, discretionary, oil and gas, power, telecom, internet, real estate, and select domestic healthcare plays. Financials are particularly attractive due to low earnings risks and compelling valuations, according to the brokerage. 

 

Export-oriented sectors such as IT services, industrials, cement, and metals face caution due to global headwinds. In pharmaceuticals, potential US tariffs pose near-term risks, but Nomura views any resulting corrections as buying opportunities, expecting cost pass-throughs to mitigate impacts.