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Brokerages cite risks to demand and profits as India stocks stay volatile
PL Capital says 17.7% Nifty EPS growth is at risk and cut its 12-month Nifty target to 27,123 from 27,019 earlier.
India’s stock market has been under pressure amid renewed US-Iran tensions, higher oil prices, and a spike in global bond yields, LiveMint Markets reports. On a monthly basis, India’s benchmark Nifty fell 1.2% in August, ending a two-month winning streak, even as the firm points to India’s resilient economy and healthy Q1FY27 earnings.
Near-term volatility is expected to persist, according to PL Capital, largely due to geopolitical uncertainty and downstream effects on corporate results. The brokerage flagged potential risk to demand and corporate profit growth from higher raw material prices in the coming quarters, deficient monsoons, successive price hikes in essential goods, and a global rise in commodities and crude prices.
PL Capital also highlighted cuts to Nifty EPS across the last 5 of the last 8 years’ estimates, and said 17.7% Nifty EPS growth is at risk. The brokerage valued Nifty at a 10% discount to a 15-year average P/E of 17.6 times, using FY28 EPS of ₹1,537, and revised its 12-month Nifty target to 27,123 from 27,019.
In its updated list of high-conviction picks, PL Capital removed Britannia Industries, Titan Company, DOMS Industries, and Rainbow Children’s Medicare, while still expressing positivity on Britannia Industries and Titan Company. The firm added Supreme Industries, Amber Enterprises India, and Aster DM Quality Care, citing near-term profit headwinds for DOMS Industries and concerns about commodity inflation and valuation levels for its remaining overweight positions.
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