Stuck in Limbo: Profit-Booking, Earnings Jitters & Global Woes Keep Markets Range-Bound

Even as 'uncertainty' remains the buzzword across D-street, the recent better-than-expected Q4 play did manage to surprise investors with more hits than misses. This pushed market analysts to lift their Nifty50 targets for this year, but not without subtly raising the banners of caution.

For instance, global brokerage firm Nomura lifted its Nifty target for March 2026 to 26,140 from the earlier level of 24,970, citing stabilised macro conditions as a positive indicator. But again, that didn't stop the brokerage firm from signalling caution on corporate earnings. Even as India Inc.'s earnings growth estimates remain decent, Nomura pointed out that further earnings downgrade of 4-8% is quite likely for FY27F.

HSBC followed suit and raised similar concerns despite surprises in the quarterly performance. "Despite the beat in Q1, we believe a sustained recovery in earnings growth is still a few quarters away. Factset consensus has made sharp cuts to estimates and is now looking for 11% in 2025e. This could further surprise on the downside," HSBC said in its equity strategy report.

This is largely owing to weak urban consumption levels and slow growth in private capex. No doubt, RBI's surprise 50 bps rate cut move in the recent MPC meet did lift the market sentiment. However, the same thing might not bode well for the banking sector. A rate cut often weighs down the margin levels of banks, and eventually, the stock performance. This sector also dominates the benchmark market index. Plus, the impact of geopolitical uncertainty was already visible in the IT sector's overall earnings growth.

But, with the earnings season now behind us, the D-street is looking for fresh cues that might provide direction to the markets in an already uncertain sphere. According to analysts, the search for signals might be a tough task for now.

The Hunt for Direction

Cues are missing from the D-street, at least that's what market players and charts are pointing at. Over the last month, the NSE Nifty index has struggled to breakout from the range-bound movement, hovering below the psychological 25,200 level mark. Something similar happened on June 11.

Markets remained largely volatile for yet another session and ended marginally in the green amid a lack of fresh triggers, as per analysts. After a flat start, the index gradually moved higher in the first half, tested resistance at the 25,200 mark but failed to sustain the momentum, eventually settling at the 25,141 level.

"A fresh trigger is needed for the Nifty to decisively surpass the 25,200 hurdles; otherwise, the ongoing consolidation may continue," Mishra added," said Ajit Mishra– SVP, research, Religare Broking Ltd.

From an investor's perspective, the continuous FII buying spree over the last 2 months provides some support to the sentiment. But, perhaps, not enough to bring the markets out of the consolidation phase.

"Profit booking continues in the broader markets, driven by elevated domestic valuations. However, large-cap resilience is supporting the indices, with institutional investors favouring companies with stable earnings outlooks... meanwhile, following the recent rally, the market lacks clear direction as investors await key macroeconomic data and updates on trade negotiations," said Vinod Nair, head of research, Geojit Investments Ltd.

For now, trade negotiations continue to keep the overall outlook in limbo. A lot will depend on how the ongoing trade negotiations play out. Until then, D-Street analysts believe the markets might continue to witness a consolidation phase.