Nifty Earnings Forecasted to Grow Mid-Teens by Aditya Birla AMC

RESEARCH-REPORTS
Whalesbook Logo
AuthorKavya Nair|Published at:
Nifty Earnings Forecasted to Grow Mid-Teens by Aditya Birla AMC
Overview

Aditya Birla Sun Life AMC projects Nifty earnings growth in the low-to-mid teens over the next two years, anticipating market recovery post a challenging 2025. The outlook follows a year of geopolitical uncertainty and valuation compression, with Nifty50 delivering 10.5% returns. The fund house expects accommodative policies and rate cuts to support a 'refresh' phase, favoring large-cap stocks.

India Markets Eye Earnings Revival

Aditya Birla Sun Life Asset Management Company (AMC) forecasts Indian equity markets to reclaim their long-term growth trajectory. Nifty earnings are projected to expand in the low-to-mid teens over the next two years, signaling a recovery after a demanding reset phase experienced in 2025.

2025: A Year of Headwinds

The AMC characterized 2025 as an eventful yet challenging period. Geopolitical uncertainty, muted earnings, and valuation compression presented significant headwinds. Despite these factors, the Nifty50 achieved a 10.5% return, extending India's decade-long market rally. Investor experiences, however, were mixed, with small- and mid-cap stocks underperforming major indices.

Market 'Reboot' Sets Stage for 'Refresh'

A recent market 'reboot' has effectively cleared excesses, leading to moderating valuation froth. Equity supply has eased, foreign investor positioning remains light, and currency competitiveness has improved. This has set the stage for a projected 'refresh' phase anticipated for 2026.

Growth Catalysts Expected

Aditya Birla Sun Life AMC anticipates supportive fiscal and monetary policies. Expected catalysts include cumulative interest rate cuts totaling 125 basis points, liquidity injections, tax reductions, and Goods and Services Tax (GST) rationalization. Urban consumption is predicted to strengthen with benign inflation, fostering an earnings revival. The Reserve Bank of India (RBI) may also contribute with a 25-basis point rate cut in the coming months.

Shifting Stock Preferences

Domestic equities are viewed as attractive relative to other asset classes, while fixed income is expected to offer stability. The fund house believes the phase of indiscriminate small- and mid-cap outperformance has concluded. Large-cap stocks are now considered better positioned for the next market cycle phase.

Persistent Risks Remain

Geopolitical tensions, trade concerns, and currency movements are identified as persistent risks. The AMC cautions that 2026 is unlikely to be a straightforward upward trend. Investors can look forward to earnings-led returns following the market's adjustment.

Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.