What could move stock markets in H2 2025? Check outlook, Nifty Dec target

Analysts expect Nifty to rise up to 6 per cent in six months, with intermittent corrections likely due to global factors

With Dalal Street closing the first half (H1) of calendar year (CY) 2025 near record highs, analysts expect equities to remain firm in the second half as well, buoyed up by macroeconomic tailwinds that could counterbalance global risks.

 

At the headline level, they see the benchmark Nifty index rising up to 6 per cent from current levels over the next six months, despite likely pullbacks triggered by global events ranging from tariffs to oil prices and geopolitics.

 

Domestic triggers, according to Chokkalingam G, founder and chief investment officer at Equinomics Research, include solid economic growth, stable inflation, low oil prices, and a normal monsoon. A continued focus on capital expenditure could also help sustain the market’s momentum, he said. 

 

The Reserve Bank of India, in its June monetary policy meeting, held its 2025-26 gross domestic product growth projection steady at 6.5 per cent despite economic uncertainty, and said the aspirational growth target remains 7-8 per cent. It also lowered its inflation forecast for the year to 3.7 per cent from 4 per cent.

 

Globally, the path of US inflation will remain a key monitorable for the markets, analysts said.

 

“Risk appetite among global funds could rise if US inflation cools faster than expected. That may prompt an earlier interest rate cut, lifting risk sentiment. But if it remains sticky, the Federal Reserve could delay or scale back rate cuts, which would impact global liquidity,” said Vaqarjaved Khan, senior fundamental analyst at Angel One.

 

Global demand weakness, he added, would hurt Indian exporters if trade tensions escalate.

 

At the bourses, the Nifty 50 climbed 8.07 per cent in H1CY2025 and has recouped over 85 per cent of its earlier losses after briefly slipping into correction territory. The Sensex, meanwhile, rallied 7.4 per cent during the same period, according to data.

 

Speed bumps ahead

 

Analysts warn that any escalation in West Asia could push oil prices higher, disrupting the global inflation cycle and rattling stock markets.

 

“However, the impact of oil price shocks during conflicts has been diminishing,” said Chokkalingam.

 

Developments around trade tariffs, analysts observed, would also be closely watched. Reports suggest India and the US are aiming to seal an early trade agreement before the July 9 deadline, when higher reciprocal US tariffs are set to kick in.

 

On the domestic front, an uneven or weak monsoon remains a key downside risk, they added.

 

Investment strategy

 

Analysts recommend increasing equity exposure to quality stocks in domestic-oriented sectors to hedge against global risks.

 

“Sectors like financial, select real estate, automotive ancillaries, and industrial may outperform in the second half of CY2025. Investors should also maintain some allocation to defensives such as healthcare,” said Khan. 

 

Chokkalingam believes mid and smallcap stocks offer more headroom, as many are still trading 30-40 per cent below their peaks.

 

“Front-line stocks, in contrast, have limited upside as key sectors like fast-moving consumer goods, cement, information technology, and automotive are growing in single digits,” he said.

 

Looking ahead, five brokerages told Business Standard they expect the Nifty to rise another 2.2–5.7 per cent over the next six months.

 

Motilal Oswal has the lowest December 2025 Nifty target at 26,200 (a 2.2 per cent rise), while Centrum Broking sees it climbing to 27,100 (a 5.7 per cent gain).

 

The June series ended on a strong note, pointing to further upside, said Nilesh Jain, head of derivatives and technical research at Centrum Broking.

 

“A breakout after six months of consolidation is now evident on the charts. This setup looks favourable for a new bull run, possibly taking the Nifty to 27,100 by year-end,” he said.

 

Axis Securities and Samco Securities have each set their Nifty target at 26,800 (a gain of 4.5 per cent).