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Informist, Friday, Apr. 4, 2025

 

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--Emkay Global: Nifty 50 may fall to 21500 in Apr-Jun on US tariff concerns
--Emkay Global: Nifty 50 FY26 EPS at risk of 3% cut on possible US recession 
--Emkay Global: See severe recession in US post tariffs, fall in commodities 
--Emkay Global: Metals, technology cos to be worst hit from US recession 
--Emkay Global: Nifty 50 March 2026 target at 26000 points 

 

MUMBAI – The response of the domestic equity market to the reciprocal tariffs by the US has been "complacent", and the Nifty 50 might fall to 21500 points in the June quarter, Emkay Global Financial Services said in a strategy report Friday. Indirect effects of the tariffs such as a possible severe recession in the US will hurt India more than the direct impact, the brokerage said. Also, a significant short-term correction in prices of global commodities will hurt some sectors such as metals and chemicals, among others, it added.

 

Emkay said a recession in the US could possibly lead to a 3% cut in its earnings per share estimate of the Nifty 50 for 2025-26 (Apr-Mar). This risk of a revision is due to cuts in the earnings estimates of technology companies as a recession would affect the consensus of a recovery in the sector. Metal companies, which are large contributors to the FY26 earnings per share estimates of the Nifty 50, are also vulnerable due to lower prices, the brokerage said. 

 

However, in the longer term, rate cuts and a correction in commodity prices will offset the risks posed by a potential recession in the US, which would boost domestic-oriented sectors such as consumer discretionary. Despite a lack of visibility on the Reserve Bank of India's policy actions and their longer-term implications, the brokerage sees the Nifty 50 reaching 26000 points by March 2026.  

The financial services sector will see a strong trade in the shorter term as it is immune to the global turmoil from the tariffs, and also benefits from the RBI's aggressive moves that have turned liquidity in the system positive, Emkay said. However, the brokerage is more bullish on non-banking finance companies than banks as the former benefit more in the short term. It is netural on the information technology sector, adding that "...while earnings are at risk, valuations are ~10% away from -1sd (standard deviation) levels when the sector typically starts turning around."

 

On reciprocal tariffs, Emkay said there is some scope for negotiations, but there is "a near-zero" probability of India imposing retaliatory tariffs on the US. It also sees the likelihood of India stepping-up pro-cyclical policies to combat the negative impacts of a slowing global trade. While the central bank might intensify to ease up on various fronts, there is a little chance of a change in fiscal policy, Emkay said. The government would not risk macro-financial stability by easing both the monetary and fiscal policies simultaneously in a period of global uncertainty, it added.

 

If recession in the US is more severe than anticipated, it would lead to easing in monetary policies across the world, and India would be well positioned to attract the resultant global flows into risky assets and equities, the brokerage said. However, if these tariffs are intensified by the US, it would pose a further risk to earnings, and hence may lead to further de-rating.  End

 

Reported by Akash Mandal

Edited by Tanima Banerjee

 

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