Emkay Institutional Equities is a brokerage that forecasts continued weakness in the Indian equity market in the near term, with heightened volatility expected. However, they remain optimistic about a gradual recovery in consumption during the second half of CY25. This recovery is likely driven by improved employment trends, a rebound in unsecured lending, and increased welfare spending. Emkay sets a target for the Nifty index at 25,000 by December 2025, with expectations that Foreign Portfolio Investor (FPI) selling will subside by Q2CY25.
The brokerage identifies top investment picks in the large-cap segment, including Lupin, Zomato, Tata Motors, and IndusInd Bank. In the mid-cap space, Emkay is bullish on Escorts, Paytm, and Metropolis, while in the small-cap segment, Stovekraft and Quess Corp are highlighted as key picks.
Emkay maintains an overweight stance on the discretionary, real estate, and healthcare sectors, while remaining neutral on industrials, IT, and energy, and underweight on financials, staples, and materials due to structural concerns and valuation pressures.
The brokerage expects a recovery in discretionary consumption within 2-3 quarters, driven by a resurgence in IT hiring, improved liquidity conditions, and better retail lending dynamics. Emkay also anticipates stabilization in foreign portfolio activity after Q1CY25, potentially driven by moderating valuations and earnings forecasts.
Nirav Sheth, CEO of Institutional Equities at Emkay Global Financial Services, states that markets tend to over-react and over-extend, and that the market is currently experiencing a volatile bottoming process. He believes that the worst of the earnings downgrade cycle is behind us, and expects a recovery in the second half of the fiscal year, triggered by renewed government spending and consumption-led tax relief.