Mumbai : Domestic demand in India is set for a strong revival, with the Nifty expected to touch 27,609 in the next 12 months, a new report said on Tuesday.
The data compiled by PL Capital in its latest India strategy report said multiple factors, including benign inflation, government tax cuts, normal monsoons, and recent rate reductions by the Reserve Bank of India, are creating conditions for broad-based consumption growth.
The report titled “Ready for next leg of growth” highlighted that consumer price inflation has eased to 1.6 per cent, helped by food deflation, while rural incomes are getting a boost from normal rains.
A Rs 1,000 billion tax cut announced for FY26 is also expected to support demand. The report further added that the RBI’s 100 basis points rate cut will lower EMIs, encouraging demand for housing, cars, and personal loans.
At the same time, the upcoming GST 2.0 reforms, which will reduce and rationalise tax slabs, are likely to make goods such as automobiles, durables, medicines, and everyday staples cheaper, giving another push to consumption.
Despite US tariffs and foreign investor outflows worth Rs 410 billion, Indian markets have remained resilient in recent months.
Corporate earnings too have held up, with only minor deviations from expectations. PL Capital revised its Nifty earnings per share (EPS) estimates slightly lower for FY26 and FY27, but still expects earnings to grow at a healthy 13.2 per cent CAGR over FY25–27.
Currently, Nifty trades at 18.9 times one-year forward EPS, just below its 15-year average.
Applying the long-term valuation multiple to FY27 EPS, PL Capital arrived at its new Nifty target of 27,609, higher than its earlier forecast of 26,889.
On the sectoral front, the firm remains positive on banks, healthcare, consumer, telecom, auto, and capital goods, while maintaining an underweight view on IT services and commodities.
The report stressed that reviving consumption demand will be crucial for sustaining India’s economic growth momentum.
It added that structural themes such as defence, infrastructure, energy management systems, hospitals, and power transmission will continue to remain strong growth drivers for the economy.
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