The markets seem to have stabilised for the time being but Nomura cut its Nifty target for March next year significantly. Nomura has reset its Nifty target for March, 2026 to 24,970 on the back of Trump tariff, downside risks to earnings and economic slowdown worries. This implies a mere upside of 3% from current levels between now and next March. Nomura added that “in case of a stable risk environment, we expect FII flows to be supportive after the intense sell-off in the past six months. Assuming a valuation range of 17-20x, we expect market return of -9% to +7% over the next one year.
The international brokerage house has said that the target is based on 19.5x FY27 Nifty earnings per share of Rs 1,280. The EPS estimate is factoring in a 5% cut to current consensus estimates. They have raised the “target valuation multiple from 18.5x earlier to factor in the drop in yields, assuming no material increase in risk premium.
Nomura on India: Market expecting potential deal with US
Nomura pointed out that so far, the Indian markets have been resilient with risk premium in check.’ The key indices have recovered the losses following the ‘Liberation Day’ tariff announcement and are now trading 2% higher. Over this period (from April 2,2025 up until now), “the domestic sectors have outperformed (consumer, financials) and exporters (IT, metals, autos and pharma) have underperformed,” Nomura added.
Relatively, they believe that India has fared well “as it is also comparatively less impacted by the tariff uncertainties. The market is also expecting a potential trade deal with the US in the near-term and “India is currently better prepared to gain from supply chain relocation,” Nomura pointed out and added that, “India’s macro is largely stable with additional benefit from falling commodity and oil prices.”
According to them, “the deal-making will not be straightforward as the US tries to address structural issues, including non-tariff barriers and hence there may be delay in finalising such deals. Even if US tariffs go down from current levels, it shall still remain high and has already created significant uncertainties.”
Nomura on India: Downside risks to earnings estimates
One of the key reasons for the downward revision of the Nifty target was the “downside risks to current consensus growth and earnings estimates.” However, over the near-term, Nomura added that “we expect equity valuation to find support from drop in bond yields and if the equity risk premium does not flare up. We think the global equity market correction thus far is not excessive, despite the prospects of significant disruption to global economies.”
They believe that the “worst of the headline on tariffs and trade war is behind us, except for the announcement on sector-specific tariffs such as pharmaceuticals.”
Nomura’s Economics team has lowered growth expectations across most markets and are below consensus estimates. “The current consensus expectations assume mid-teen growth over FY25-27. Given potentially slower economic growth (our Economic team expects 5.8% real GDP growth for FY26 , we think there is downside risk to the current consensus earnings estimates.”
They expect earnings growth to be in line with nominal GDP growth in the near-term.