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Informist, Thursday, Sept. 4, 2025

By Gopika Balasubramanium

MUMBAI – Domestic equity indices are expected to be in a range, with profit-booking at higher levels in the near term, analysts said. Optimism around the government's GST cuts is largely factored in, analysts said, adding that now, the Street anticipates momentum in earnings growth of Indian corporates. They expect the three measures from the government – tax rebate, interest rate cut, and GST rationalisation – to drive demand in the second half of 2025-26 (Apr-Mar), improving earnings in consumption-led sectors such as consumer durables, automobile, and fast-moving consumer durables.

On Thursday, the Nifty 50 closed at 24734.30 points, up 19.25 points. The BSE Sensex closed at 80718.01 points, up 150.30 points or 0.2%. All broader market indices ended in the red after coming under intense selling pressure. "It turned out to be a disappointing session for the bulls as the markets failed to capitalise on the positive GST outcome," Rajesh Bhosale, technical analyst at Angel One, said in a note. "This indicates that the development may have already been factored into prices, leading to profit booking post the announcement." Technical analysts expect the 50-stock index to face resistance at 25000 points and find support at 24650-24400 points.

The Nifty 50 has gained over 3% in Jan-Aug and has risen nearly 4% in Apr-Aug. The index underperformed in terms of returns among most of its global peers such as Hong Kong's Hang Seng, China's CSI 300, and Germany's DAX Performance. When asked why the index hasn't seen sharp gains even after huge stimulus from the governmet, Sunny Agrawal, head of research of SBICAPS Securities said, "Street is awaiting for pace of earnings growth to accelerate and the same is likely to kick in from Dec-25 qtr onwards." This is why he sees Oct-Mar as better than Apr-Sept in terms of earnings growth, he said. 

"Although Nifty (50) appears to be flat, stock-specific action is clearly visible," he said. He also said it is important to note that more than 30% weightage in the Nifty 50 is accounted for by banks and non-banking financial companies, which remained in a range in anticipation of a muted September quarter. The other large sector, information technology, has also been struggling due to an uncertain global environment. This has nullified the effect of any other index constituent rising sharply, he said, adding that the Nifty 50 cannot be the gauge of overall growth; one can also be stock-specific. 

"The primary reason for the underperformance of the market in the past year is weak domestic growth," analysts at HSBC said in a equity strategy report on Thursday. Indian corporate earnings have grown in single digits for five straight quarters amid weak domestic demand, the report said. "With these policies in place, we expect growth to accelerate from Q4 CY25 (Oct-Dec) onwards," HSBC said. "Consensus expects EPS to grow 14% y-o-y (year-on-year) in 2026, and in our view the policies supporting growth along with a favourable base have eased the risks of earnings downgrades and set the stage for foreign investors to return," HSBC said.  End

Edited by Avishek Dutta

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