Indian equities enter Samvat 2083 against a challenging global backdrop, but resilient domestic economic growth and an expected recovery in corporate earnings offer reasons for optimism, according to Motilal Oswal Financial Services.
The brokerage believes FY27 could mark a return to double-digit earnings growth, with Nifty50 earnings per share (EPS) expected to rise 16 percent year-on-year, followed by 14 percent growth in FY28. This would mark a significant improvement from the modest 5 percent growth estimated for FY26.
The previous Samvat was challenging for investors, with the Nifty50 declining around 12 percent until October 29, weighed down by the West Asia conflict, crude oil prices above $100 per barrel, a weaker rupee and sustained foreign investor selling. Foreign institutional investors (FIIs) pulled out around $28 billion between January and September 2026.
However, the brokerage believes the underlying domestic fundamentals remain relatively strong. India's GDP grew 7.8 percent in the first quarter of FY27, while record systematic investment plan (SIP) inflows helped domestic investors absorb significant foreign selling.
Motilal Oswal also sees valuations becoming more comfortable following the market correction. The Nifty is trading at 17.5 times forward earnings, around 16 percent below its long-term average. Midcap valuations are also about 6 percent below their historical average, although smallcaps continue to command a 25 percent premium, warranting greater caution in that segment.