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Informist, Thursday, Apr. 2, 2026

 

MUMBAI – Earnings of Nifty 50 companies are expected to grow at a compounded annual growth rate of 16% during 2025-26 (Apr-Mar) to FY28, supported by strong policy measures by the government, Motilal Oswal Financial Services said in a report on Thursday. While this projection may still face a test due to the impact of the ongoing war in West Asia, the likelihood of these companies posting double-digit earnings growth remains strong, analysts at Motilal Oswal wrote in the India strategy report.

 

With the recent correction in India's headline indices after the start of West Asia war, valuations have become "much sober" and provide a strong entry point for these indices, given the "structural" case for India's economy remains as strong as ever, according to the report. At 1343 IST, the Nifty 50 index was at 22528.65 points, down 150.75 points, or 0.7%. Currently, the index is down 12% from pre-war levels and 16% from the record highs seen early January.

 

Post the correction, the index is trading at 17.7 times the price-to-earnings multiple. "Moreover, Indian market's valuation premium, which has been a bone of contention for EM (emerging market) investors, has shrunk sharply to 27% vs. a 10-year average of 73% and a peak premium of 145% and closer to a decadal-low premium of 21%," Motilal Oswal said.

 

Indian equities underperformed in FY26 primarily due to global headwinds, overlooking the undercurrents of improving trends of earnings of Indian companies, the report read. It cited various reasons for the underperformance such as better growth visibility in other markets, compelling valuation differential in favour of other emerging markets, improving prospects for equity markets in South Korea, Taiwan, Brazil, South Africa, and Thailand due to artificial intelligence-driven boom or rising commodity prices, India's absence in the "global AI gold rush", and a perception of reduced geopolitical leverage after a brief war with its neighbour.

 

However, the broking firm sees the underperformance in FY26, especially due to record outflows of foreign investment, setting a favourable base for FY27. "While the duration of the ongoing Iran-Israel war remains the key overhang, a resolution to the war will likely release pent-up positive sentiment and aid Indian markets to recoup the losses and underperformance of FY26," the broking firm said.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Gopika Balasubramanium

Edited by Deepshikha Bhardwaj

 

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