Nifty 50 may reach 25,200 level by March 2025; premium valuation justified by cyclical, structural tailwinds, says UBS
₹1,226 and a 12-month forward target PE multiple of 20.6x. Also Read: Sensex, Nifty 50 at record high; is market overheated? What should investors do? “After a strong run-up of Indian equities, some profit-taking in the near term cannot be ruled out as economic and geopolitical risks remain elevated.
Nevertheless, India remains in a sweet spot, in our view, and we recommend investors to use any corrections as buying opportunities given the long-term structural growth opportunities that exist," Kamdar added. He likes autos, industrials, utilities, real estate, consumer durables and healthcare sectors that have high domestic exposure.
The brokerage is neutral on Financials, FMCG, IT, Oil & Gas, and Chemicals, while it is least preferred on the metals and telecom sectors. Key risks for Indian markets, according to the UBS analyst, include unfavorable election outcomes, a delay to the start of the rate cut cycle, and geopolitical tensions in the Middle East (surge in oil prices).
Also Read: Nifty Next 50 outperforms all major indices in February, Microcap 250 up over 95% in 1 year; check details The inclusion of India’s government bonds in the JP Morgan Global Bond Index in June 2024 and in the Bloomberg Index in January 2025 has fueled optimism among foreign investors as seen in the surge in FPI flows ($4.8 billion YTD) into Indian debt markets. On the policy front, Kamdar believes that the Reserve Bank of India (RBI) could act in the June quarter by shifting its stance to neutral followed by a cumulative 50 basis points (bps) rate cut in the second half of the year.
Although the RBI remains cautious, fiscal consolidation and bond-index-inclusion-related inflows will likely see bond yields fall over the coming months. He
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