Nifty 50 expected to deliver 16% earnings growth in 2024-25, small cap likely to outperform: Report
Buy or sell: Osho Krishan of Angel One recommends buying Bajaj Finserv and Chalet Hotels tomorrow “The large cap indices are likely to deliver slightly better than average earnings growth in 2024-25. The small cap index is likely to deliver the best earnings growth in 2025-26. Mid cap earnings growth expectation is below its long-term average," said the brokerage firm.
During Oct-Dec’23 results season, both Nifty 50 and Nifty large cap 100 delivered better than expected results. Earnings growth of both Nifty mid cap 150 and Nifty small cap 250 were slower than large caps. However, mid caps did better than small caps.
“Even if we assume fair PE multiples of the respective indices would be significantly lower than the average forward PE multiples during similar phases of business cycles in the past, we do not observe any major froth in the Indian equity markets currently. On the contrary, Nifty small cap 250 seems to be trading significantly below the fair valuation," it added. The report further suggests that up to 10% correction within a year is common and such an event cannot be ruled out.
On an average, market recovers from such corrections within two months. Also read: Expert Views: Don't expect fantastic returns from small cap segment going forward, says Jimeet Modi of SAMCO Securities “While relatively small short-term market corrections are possible, we do not see reasons for significant market correction," it said. Past data shows that within a year, market sometimes corrects sharply.
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