PL Capital has raised its one-year Nifty target to 27,019 from 26,449 earlier, citing an improvement in the macroeconomic environment, easing crude oil prices and attractive market valuations despite near-term risks from geopolitical tensions and weather-related disruptions.

The brokerage said it values the index at a 10 per cent discount to its average 15-year price-to-earnings multiple based on FY28 earnings estimates. Despite the recent rally, PL Capital said the Nifty continues to trade at an 11.7 per cent discount to its historical average valuation.

Global brokerage Goldman Sachs recently lifted the June 2027 Nifty target to 26,500, based on expectations of returning foreign inflows and a strengthening domestic recovery.

Banks, NBFCs, defence and telecom among preferred sectors

From a sectoral perspective, PL Capital remains positive on banking, NBFCs, capital goods, defence, telecommunications, jewellery, hospitals and consumer durables, supported by favourable trends in domestic demand, infrastructure spending, manufacturing prospects and credit growth.

The brokerage, however, remains cautious on auto, consumer, IT services, cement, chemicals and oil & gas companies.

West Asia tensions and El Niño remain key risks

According to PL Capital’s latest India strategy report, the structural growth story remains intact, but the domestic economy faces near-term risks from geopolitical uncertainty, weather-related disruptions and inflationary pressures.

The report noted that the Nifty index has gained nearly 7.3 per cent over the past two months and 8 per cent from its 52-week lows, supported by easing crude prices, a temporary ceasefire in West Asia and robust domestic economic performance.

PL Capital highlighted that credit growth has accelerated to 17 per cent, indicating healthy demand across retail, services, agriculture and industrial sectors, while government policies have helped shield the economy from global supply chain disruptions and commodity price volatility.

However, the brokerage said earnings expectations remain under pressure and reduced its FY27 and FY28 Nifty earnings estimates by 0.9 per cent and 0.4 per cent, respectively. It added that further earnings downgrades cannot be ruled out if geopolitical developments or adverse weather conditions impact consumption and corporate profitability.

The brokerage flagged rising input costs as a key concern, noting that higher food prices, crude oil costs and logistics disruptions could gradually feed into inflation during the second half of FY27. It also warned that inflation could rise due to an unfavourable base effect and the increasing likelihood of a Super El Niño event during the current monsoon season.

The brokerage also said geopolitical developments in West Asia will continue to influence India’s macroeconomic outlook, with any escalation potentially disrupting global supply chains and commodity prices despite the recent decline in oil prices.

On monetary policy, PL Capital expects domestic liquidity conditions to improve further with the planned FCNR bond issuance, but cautioned that higher food and fuel inflation could make an interest rate hiking cycle unavoidable in the second half of FY27.

Commenting on the report, Amnish Aggarwal, Co-Head of Institutional Equities at PL Capital, said India has demonstrated resilience despite an uncertain global backdrop, supported by domestic demand, lower crude prices and healthy credit growth. However, he cautioned that investors should remain mindful of geopolitical developments, inflationary pressures and the impact of El Niño, while maintaining a stock-specific investment approach.

Published on July 15, 2026