India’s benchmark equity index NSE Nifty50 is expected to reach the 26,100 level by December 2025, Kotak Securities said in its Market Outlook 2025 report while maintaining a “cautiously optimistic” stance on domestic equities.
The brokerage suggests long-term investors should focus on quality assets amid expensive valuations.
Global economies are stabilizing as monetary policies shift towards easing, with expected interest rate cuts in the US, Europe and Asia. Domestically, inflation remains high, especially in food prices. Despite inflation staying above target, a sharp decline in GDP could increase the likelihood of an interest rate cut in the February policy.
Year-to-date sector leaders for CY24 included Realty with over 31 per cent return, Pharma with over 30 per cent return, and Power with 26 per cent return. Q2FY25 results revealed weak overall growth, with strong performances in Banks and Capital Goods, while IT and consumer sectors underperformed.
Shripal Shah, MD & CEO at Kotak Securities says India maintains its position as one of the world's fastest-growing major economies, making it a compelling investment destination for global investors.
“While we remain confident in India's long-term growth potential, we advise investors to approach the market with a degree of cautious optimism. We foresee the equity market to gain more momentum and commodities crossing its historic best in 2025,” he said.
In addition, an increase among young investors entering the stock market to build wealth early on will also add to the overall market growth, Shah added.
Nifty Target
Nifty’s FY25E earnings growth is expected at 4.9 per cent, followed by 16.3 in FY26 and 14 per cent in FY27, according to Kotak Securities report.
In its base case, Nifty is projected to reach 26,100 by December 2025, assuming a 19x PE on FY27 EPS of Rs 1,372.
In the bull case scenario, the brokerage firm expects the benchmark index to hit 28,800 level at 21x PE. While it can drop to the 23,300 level in the bear case scenario.
Commodity Outlook
According to Kotak Securities, the year 2024 was a standout for commodities, with gold reaching an all-time high of USD 2,801.8 per ounce on Comex and silver surging over 59 per cent, driven by strong central bank demand, geopolitical tensions and growing industrial applications in green technologies.
However, crude oil prices witnessed volatility as they started strong on supply risks but ending under pressure due to weak Chinese demand and increasing US production.
“As we move into 2025, gold and silver are expected to retain their strength, bolstered by safe-haven demand and industrial needs, though strong dollar and Trump’s economic policies could temper gains,” the brokerage firm said.
It added that the crude oil faces challenges from a projected global surplus, but continued tensions in the Middle East and Russia-Ukraine conflict may provide occasional support.
Currency Outlook
In 2024, the Dollar-Rupee remained relatively stability, with the Rupee benefitting from proactive RBI interventions even as the US Dollar strengthened globally. Analysts at Kotak Securities expect the next year to bring increased volatility as the Trump administration’s trade policies and fiscal reforms disrupt global markets, potentially driving the Dollar higher.
“The Federal Reserve’s monetary stance will play a critical role in shaping the currency's trajectory. USD/INR could test the 86/87.00 levels. Participants should prepare for a dynamic trading environment marked by geopolitical uncertainty and evolving global economic conditions,” the report said.
