Axis Securities in their outlook for H2CY26 shared that it expects Nifty to cross the 27,000 mark and reach 27,200 at the end of 2026 with a price to earnings multiple of 19.5x. The brokerage shared that the Strait of Hormuz must reopen keeping Brent crude in the $80-90 per barrel range for this scenario to play out. Along with this, it also assumed an improvement in monsoon and a rate cut by RBI before the end of the year.
The brokerage expects a gradual return of FPIs in the second half of the year with ease in the risk-off sentiment globally with India’s macro premium versus its emerging market peers supporting allocations. It kept the earnings growth estimate of 12-14% for Nifty in FY27 intact and suggested investors to overweight quality BFSI, capital goods and pharma sectors with selective allocation to IT on dips. It stayed neutral on FMCG sector due to uncertainty related to monsoon.
In a bull case scenario, the brokerage expects the US – Iran ceasefire to hold with a full reopening of the Strait of Hormuz, reducing Brent crude prices to $70-80 per barrel. Along with this, it also assumed a rate cut by the US Federal Reserve of 25 bps and rainfall in excess of the long period average.
In such an event, the brokerage expects Nifty to close at 28,615 at the end of 2026 at 20.5x price to earnings driven by FII driven re-rating, consumption recovery and expansion in corporate margins. It also expects FPI inflows between Rs 1.4-1.8 lakh crore by the end of the year in such a scenario driven by India’s macro story. Under such market conditions, the brokerage recommended investors to add cyclical stocks from metal and auto sectors and increase allocation to mid caps. For tactical play, it suggested investors to ride momentum in rate-sensitive NBFCs and housing finance.
However, in the event of an escalation in the West Asia conflict pushing the Brent crude prices above $110-120 per barrel and the current account deficit above 3.5% of GDP along with a below-normal monsoon forcing RBI to hold rates, Axis expects Nifty to drop to 23,030 by the end of the year with a 16.5x price-to earnings. It added that this could lead to earnings downgrades across energy-sensitive sectors and rupee-dollar exchange rate near 100.
The brokerage expects foreign investor inflows to drop to Rs 50,000-80,000 crore levels leading to an increase in volatility despite domestic investors absorbing the shortfall. In this bear case, it recommended a strategy of increasing exposure in defensive sectors like pharma, FMCG staples and IT cash-generative companies along with reduction in exposure to cyclical sectors and increase in allocation to other asset classes like gold.