Stock Market Anticipates Recovery in Second Half, Nifty Eyeing 25,000 by Year-End
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Synopsis
The Nifty index is forecasted to reach 25,000 by December 2025, driven by a resurgence in consumer spending and easing foreign investor sell-offs, according to a report. The Indian stock market is likely to see volatility in early 2025, but recovery is expected in the latter half.
Key Takeaways
- Nifty may reach 25,000 by December 2025.
- Recovery expected in the second half of 2025.
- Increased retail lending and government spending to support markets.
- Foreign investor selling to subside by Q2 2025.
- Corporate earnings projected to grow in FY26.
Mumbai, February 18 (NationPress) The Nifty index is projected to hit 25,000 by December 2025, fueled by a resurgence in consumer spending, enhanced employment trends, and a reduction in foreign investor sell-offs, according to a recent report released on Tuesday.
Emkay Institutional Equities anticipates that the Indian stock market may experience volatility in the short term, but a recovery is on the cards for the second half of 2025.
The research firm expects the initial quarter of 2025 to be marked by increased market fluctuations due to sluggish demand and global uncertainties.
Nevertheless, the latter half of the year is expected to benefit from a rise in retail lending, improved liquidity, and increased government welfare expenditures, which will likely foster economic recovery and enhance market sentiment.
“Markets have a tendency to overreact and extend beyond reasonable limits, both upward and downward,” stated Nirav Sheth from Emkay Global Financial Services. He emphasized that the current phase of bottoming out is typically volatile.
“We believe that the most severe phase of the earnings downgrade cycle is behind us and anticipate a recovery in the latter half of the fiscal year, spurred by renewed government spending and tax relief-driven consumer expenditure. Now is the right time to invest,” Sheth added.
Sector-wise, Emkay Institutional Equities holds an Overweight position on discretionary consumption, real estate, and healthcare sectors. However, they express caution towards financials, consumer staples, and materials due to valuation issues and structural challenges.
The firm also observed that the foreign portfolio investor (FPI) sell-offs, which have been a significant concern for the market, are likely to diminish by the second quarter of 2025.
A decline in the US Dollar Index (DXY) could also help stabilize the Indian rupee, thereby further facilitating market recovery.
Corporate earnings are forecasted to improve, with mid-teens growth expected for FY26, predominantly driven by financials, metals, and energy stocks.
Emkay also highlighted that capital expenditure growth, which recorded a robust 31 percent CAGR between FY21-24, might decelerate to 10-13 percent due to constraints related to election spending.
However, a rebound is anticipated in FY26 as policy clarity returns. In spite of the short-term fluctuations, the report maintains an optimistic outlook on the long-term potential of the Indian stock market.
