Nomura Predicts Nifty to Hit 24,000
Global financial services firm Nomura anticipates the Nifty 50 index will breach the 24,000 mark by March 2027. This optimistic forecast is underpinned by several key factors expected to bolster the Indian equity market.
Key Drivers for Market Growth
A significant catalyst for this projected growth is the improving sentiment among foreign institutional investors (FIIs) towards Indian equities. Nomura expects increased portfolio flows in the near term, reversing recent selling trends. Furthermore, the prospect of a potential cut in the long-term capital gains (LTCG) tax for FIIs could provide substantial support to the domestic market. A fall in global bond yields and expectations of a stable rupee, potentially aided by central bank intervention, are also cited as contributing factors.
Strong Earnings Momentum
The Indian market is currently experiencing strong earnings growth momentum. Nomura notes that the Q2 earnings season has started positively, following a robust Q1. For its coverage universe, normalized profit after tax (PAT) grew 34% year-on-year (YoY) in Q2, significantly beating consensus estimates by 18%. Even excluding the oil and gas sector, PAT growth remained strong at 29% YoY, still surpassing consensus by 5%.
The demand environment has held up well, leading to strong revenue growth across various segments, although some compression in EBITDA margins was observed due to higher commodity prices. Nomura highlights that the cyclical recovery, spurred by fiscal and monetary stimulus in 2025, has exceeded Street expectations.
Valuations and Investor Flows
Despite the positive outlook, Nomura acknowledges that current valuations across most sectors remain below post-pandemic averages. This relatively cheaper valuation, coupled with corrections in artificial intelligence (AI) stocks, presents an attractive entry point for investors.
Regarding investor flows, FIIs saw substantial outflows, selling $5 billion in the fortnight ending October 15, marking the heaviest fortnightly outflow in 12 periods. Net selling since September 15 totaled $8.8 billion. However, Nomura observes that the intensity of this selling has eased over the subsequent 15 days, suggesting a potential turnaround in foreign investment trends.
Lingering Concerns
While the short-to-medium-term outlook is positive, Nomura cautions that longer-term market concerns persist regarding geopolitical and technological uncertainties, which could weigh on long-term growth expectations. Oil prices also remain a factor, though they have corrected by 7% from their recent peak.