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Informist, Tuesday, Aug. 4, 2026

 

By Arya S. Biju

 

MUMBAI – The positive sentiment surrounding the domestic equity market is likely to keep Nifty 50 in the green for the third straight month in August amid indications of healthy economic activity, hopes of improving corporate earnings, falling crude oil prices, and reduced selling by foreign portfolio investors, according to market participants. However, uncertainty around the over-five-month-long sporadic war in West Asia and concerns over expectations of below-normal rainfall in August and September amid persisting El Nino conditions are expected to limit the upside, they added. 

 

The median of estimates from 13 brokerages polled by Informist suggests the Nifty 50 could rise 1.6-2.4% from current levels, before facing resistance at 25000-25200 points. Resistance levels of technical analysts suggest the index could rise anywhere between 0.5% and 3.2%. 

 

Even as the US-Iran negotiations are yet to lead to a meaningful breakthrough, and the risk of higher energy prices impacting economic growth persists, analysts do not expect a sharp correction in the market from the current levels. "We feel a lot of the selling is behind us...And even if the buying does not happen in a hurry...there's no headroom for such rigorous selling that we saw over the past year and a half," Nirav Karkera, head of research and fund manager at W by Groww said. 

 

Adding to the positive sentiment, earnings for the June quarter turned out to be better than expected so far, with the intensity of the earnings downgrade moderating. Further, the Indian equity market is said to be well-positioned to capture the incremental diversification of capital by global investors with steady economic growth momentum, cheaper valuations, hopes of earnings recovery, and a stabilising rupee.   

 

The median of support levels suggests the Nifty 50 index could fall 1.7-2.7% from current levels in August and find support at 24200-23950 points. This is almost 4–5% lower than its pre-Iran war levels and 8-9?low the all-time high of 26373.20 points hit in early January. A surge in crude oil prices due to further escalation in the war in West Asia and a potential deficit Southwest monsoon remain key downside risks for the market.   

 

EARNINGS, GROWTH OUTLOOK

Corporate India entered the financial year 2026-27 (Apr-Mar) on a slightly positive note with June quarter earnings being largely better than expected. The aggregate revenue of 211 companies under the coverage of Motilal Oswall Financial Services grew 21% on year in the June quarter compared to estimated 17% growth, it said in a strategy report. The cumulative net profit of these companies grew 2% on year as against the 10?cline anticipated. Excluding oil marketing companies, which largely bore the brunt of higher energy costs due to the war in West Asia, revenue of 208 companies grew 18% on year compared to the 15% growth expected while net profit grew 17% as against the 13% growth estimated.

Among the Nifty 50 companies, the aggregate net profit of the 39 companies which have reported their June quarter earnings so far grew 11% on year, compared to 7% growth estimated. The cumulative revenue of these companies grew 19% on year in the June quarter as compared to the 16% growth expected, the brokerage said in the report. "We feel the (earnings) downgrade cycle is largely behind us if not entirely...We are indeed expecting a recovery...we are not expecting a very sharp uptick but at least healthy gradual recovery from here on and through the rest of the second half of the fiscal," Karkera said. 

While volatility in energy prices due to the war in West Asia and expectations of monsoon deficit remain key overhang, analysts are largely upbeat on the country's growth going forward, as indicated by largely steady domestic demand, strong credit growth, and benefits of goods and services tax cuts and other government measures panning out. Some analysts expect the country's GDP growth to exceed the Reserve Bank of India's projection of 6.6% for FY27. "I would be surprised if it (GDP growth) is not above 6.6%. It can easily go to 7?cause there are very strong macro indicators," V.K. Vijayakumar, chief investment strategist, Geojit Investments said. On a similar note, SBI Research noted that the situation has changed in terms of war in West Asia and the GDP growth for Apr-Jun could be much better than anticipated at 7%. 

 

However, despite expectations of an over-7% GDP growth for FY27, the RBI is widely expected to hold the interest rate steady at 5.25% in its Monetary Policy Committee meeting outcome scheduled Wednesday. Most economists polled by Informist said keeping the policy stance unchanged at neutral will give the rate-setting panel more room to respond to any future shock arising from the war. The committee left the repo rate unchanged in the past three meetings after lowering it by 125 basis points in 2025.

 

Even though rainfall improved in July from the 35?ficit logged in June, the India Meteorological Department expects belownormal rainfall in August and September amid persisting El Nino conditions. While the temporary supply-side pressure is seen keeping food prices elevated in the near term, analysts do not see the monsoon deficit as a major economic challenge in the current scenario. Recovery in rainfall in July, comfortable foodgrain stocks and reservoir storage, resilient rural demand and a supportive interest-rate environment are seen preventing the delayed monsoon from becoming a broader economic challenge, Bajaj Asset Management said in a report. 

 

FOREIGN INVESTORS VS INDIAN EQUITIES

After four consecutive months of selling, foreign portfolio investors turned net buyers of domestic equities in July, buying Indian stocks worth INR 202 billion. A combination of geopolitical uncertainties, moderating earnings growth, a weak rupee, and elevated valuations have kept the sentiment toward India firmly negative in the past. However, with signs of earnings recovery, a stabilising rupee, and comfortable valuations after the recent correction, India is seen as a preferred destination for global investors who are looking to diversify from the crowded artificial intelligence stocks, analysts said. 

 

Investors had turned cautious over AI stocks globally amid continued AI investment commitments from technology leaders despite no clear near-term pay-off. India is seen relatively insulated from the global AI trade due to the lack of pure-play companies in the sector.

 

However, it is too early to say whether the recent buying of Indian equities by foreign investors is indicating a meaningful return to the domestic market, analysts said. "But the stage of sustained selling is over," Vijayakumar said. "Good inflows through the FCNR(B), ECB, and OFCB (Foreign Currency Non-Resident (Bank), External Commercial Borrowings, and Overseas Foreign Currency Borrowings) routes have contributed to stabilising the rupee, which, in turn, is facilitating an FII comeback," he added.  

 

LARGE CAPS VS MID-SMALL CAPS

In the near-term, analysts expect large-cap stocks to outperform their mid- and small-cap peers, supported by cheaper valuations and steady earnings, analysts said. "A lot of correction has been seen in the prices, a lot of time correction has happened over the past couple of quarters. So, what that essentially means is that the margin of safety is relatively higher, at least on the large caps," Karkera said. "If we talk about the small and mid-caps, it is really a mixed bag...the earnings growth trajectory is far steeper in small caps versus mid-caps. But the sustainability of the same is slightly questionable," he said, adding that there are growth opportunities in select pockets. 

 

BROKERAGE	Support 1	Support 2	Resistance 1	Resistance 2
Anand Rathi Shares and Stock Brokers	23900	24200	25000
Angel One	24200-24000	23800	24750-25000	25400
Choice International	24350	24150-24100	24800	25000
Globe Capital Market	23800	23600	25000	25200
HDFC Securities	23900		24800	25100
Lakshmishree Investment and Securities	24450–24400		24750	25000
LKP Securities	24200	23600	24800	25350
Motilal Oswal Financial Services	24200		25200
Nirmal Bang Institutional Equities	24260		25400
SAMCO Securities	24000	23900	25000	25200
Ashika Group	24200	24000	24775-25000	25400
Teji Mandi Investment Technologies	24000		25000
Nirmal Bang Institutional Equities	24000		25200
Median	24200	23950	25000	25200

End

 

With inputs from Team Informist

 

US$1 = INR 95.3775

 

Edited by Deepshikha Bhardwaj

 

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