The domestic markets have largely remained flat over the past three months, reflecting resilience despite challenges such as the escalating imposition of U.S. penal and non-penal tariffs, alongside ₹850 billion in Foreign Institutional Investor (FII) selling, according to a recent report by PL Capital. Favorable monsoon conditions and an expected recovery in domestic demand have been instrumental in helping the markets weather the adverse news.
PL Capital noted that the geopolitical environment continues to be precarious, and India is coping with the repercussions of penal tariffs and a significant increase in fees for H-1B visas. Nevertheless, growing exports from the Gulf Cooperation Council (GCC) countries are likely to mitigate any profound negative impact on the Indian economy.
On the market outlook, PL Capital values the Nifty index at its 15-year average Price-to-Earnings (P/E) multiple of 19.2 times, based on an estimated Earnings Per Share (EPS) of ₹1,499 for September 2027, leading to a new 12-month target of 28,781, an upward revision from the previous target of 27,609. In a bullish scenario, applying a higher multiple of 20 times results in a target of 30,220, up from an earlier estimate of 28,990. Conversely, in a bearish case, assuming the Nifty trades at a 10% discount to its long-term average, PL Capital derives a target of 25,903, slightly up from a previous target of 24,848.
PL Capital highlighted that domestically oriented sectors are likely to continue outperforming, forecasting strong performance for sectors including banks, non-banking financial companies (NBFCs), automotive, retail, consumer staples, defence, metals, and select durable goods.
Strong Q2FY26 Earnings Forecast
Within its coverage universe, PL Capital anticipates robust growth for the second quarter of the fiscal year 2026 (Q2FY26), predicting a 9.7% increase in sales, an 11.2% rise in EBITDA, and a 9.9% growth in Profit Before Tax (PBT). This growth trajectory is expected to be driven primarily by the commodities sector, including metals, cement, and oil and gas, alongside telecom, asset management companies (AMCs), and electrical manufacturing services (EMS). In contrast, banks, Housing Finance Companies (HFCs), media, and travel sectors are expected to report declines in PBT, while consumer, IT, hospital, and pharmaceutical sectors may see single-digit growth in PBT.
Top Picks
PL Capital recommends stocks such as Adani Ports, Apollo Hospitals, Britannia, Hindustan Aeronautics Limited (HAL), ICICI Bank, and ITC as part of its large-cap recommendations. For mid- and small-cap selections, the brokerage favors Amber Enterprises, DOMS Industries, Eris Lifesciences, and Voltamp Transformers. Additionally, PL Capital has included Mahindra & Mahindra, Tata Steel, State Bank of India, Amber Enterprises India, and Latent View Analytics in its conviction picks, while removing Bharti Airtel, Aster DM Healthcare, Crompton Greaves Consumer Electricals, and Ingersoll Rand (India) from its recommendations.
Published on October 14, 2025.
