Motilal Oswal Financial Services forecasts a earnings rebound for Indian equities in Samvat 2083, with Nifty50 earnings growth projected at 16 percent for FY27. This outlook marks a shift from the stagnation seen in FY26. The brokerage suggests that large-cap valuations are now more attractive, though investors should remain cautious of risks like inflation and geopolitical instability.
Motilal Oswal Financial Services expects a significant earnings recovery as the Indian market enters Samvat 2083. The brokerage projects Nifty50 earnings per share to grow by 16 percent in FY27, followed by a 14 percent expansion in FY28. This forecast indicates a rebound from the slower growth environment of FY26, which recorded only 5 percent expansion. The optimism is supported by steady domestic fundamentals, highlighted by a 7.8 percent GDP growth in the first quarter of FY27.
Valuation and Market Positioning
The market currently presents a different valuation landscape compared to recent peaks. The Nifty50 is trading at 17.5 times forward earnings, which is approximately 16 percent below its long-term historical average. This shift suggests that valuations have become more comfortable for long-term investors. However, the firm notes that the broader market is not uniform in its pricing. Small-cap stocks are still trading at a 25 percent premium relative to their historical averages. Consequently, the brokerage suggests prioritizing large-cap exposure to mitigate potential downside risks while focusing on selective, fundamental-led stock picking.
Macroeconomic Challenges
The improved earnings outlook faces ongoing macroeconomic hurdles. The preceding year, Samvat 2082, was marked by a 12 percent decline in the Nifty50. This downturn was largely influenced by geopolitical instability in West Asia, which has kept Brent crude oil prices elevated above $100 per barrel. Furthermore, inflation remains a persistent concern, with the Consumer Price Index (CPI) recorded at 5.54 percent in September 2026. The market also grappled with substantial selling pressure from foreign institutional investors (FIIs), who offloaded nearly $28 billion between January and September 2026.
While FIIs have shown early signs of returning to the market in November 2026, the brokerage advises investors to remain watchful of key triggers. The trajectory of interest rate cycles determined by the Reserve Bank of India, fluctuations in global commodity prices, and the stability of trade agreements will be important factors in the year ahead. Success in the current environment will likely depend on monitoring these variables alongside company-specific earnings delivery rather than relying on broad-market participation.