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Informist, Thursday, Feb. 20, 2025

By Akshita Kumar and Anshul Choudhary

MUMBAI – Technical analysts expect benchmark indices to rise slightly Friday after the Nifty 50 managed to recover from its support level of 22800 points for the fifth straight session. Having said that, gains are likely to be capped considering tariff related concerns are still present and the outlook on earnings growth is also at a risk of further downgrades.

In a report Thursday, Elara Securities said they have cut earnings estimates for 2024-25 (Apr-Mar) and FY26 by 6% each for its coverage universe. "Earnings revisions reflect the continued slowdown in consumption and weakening of government capex spending," the brokerage said. "If these do not pick up significantly in the next six months, there could be risk to our FY26 earnings growth assumption."

Nomura Global Markets Research also said that slower growth in capital expenditure by the government may create a problem for overall economic growth and lead to further cut in earnings estimates. "We had expected potential consensus earnings cuts of 3-6% for FY26-27F. We think an additional low- to mid-single-digit percentage earnings cut remains a possibility," the brokerage said.

As per its base case, the Nifty 50's target at 2025-end was 23784 points, implying a return of just 4% from the current levels. Nevertheless, the brokerage does expect a "cyclical" recovery in the GDP growth from the low of 5.4% in Jul-Sept. The brokerage is overweight on financials, consumer staples, oil and gas, telecommunication, power, pharmaceutical, internet companies, and real estate, but underweight on consumer discretionary, automobiles, capital goods, cement, hospitals, and metal sector.

The benchmark indices are expected to open with a gap-up if global cues remain favourable. The Nifty 50 is likely to rise to 23150-23200 points before facing resistance, while support is seen at 22800 points. For now, analysts are not expecting any major fall and even if 22800 breaks, the next support is seen at 22700-22500 points. On Thursday, the Nifty 50 closed at 22913.15 points, down 19.75 points or 0.1%. The BSE Sensex ended at 75735.96 points, down 203.22 points or 0.3%.  End

Edited by Ashish Shirke

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