Nifty Could Reach 29,094 in 12 Months as Earnings Upgrade Cycle Emerges, Says PL Capital

Mumbai | November 27

India’s equity market may be entering a decisive turning point, with PL Capital’s India Strategy Report (released 21 November 2025) indicating that the long-awaited earnings upgrade cycle may finally be taking shape. If this momentum holds, the report suggests the Nifty 50 could advance to 29,094 over the next 12 months, supported by improving corporate profitability, resilient domestic demand and stable macro conditions.

The Nifty has already risen 4% in the past three months, rebounding from a prolonged consolidation phase. According to the report, this recovery is not a technical bounce but is underpinned by an encouraging improvement in underlying earnings. Companies under PL Capital’s coverage universe delivered 8.1% revenue growth in Q2FY26, alongside stronger 16.3% EBITDA and 16.4% PAT expansion; both above expectations. This marks the first meaningful earnings beat in several quarters.

Upward Revisions Point to a Turning Macro Cycle

Crucially, PL Capital highlights that Nifty earnings forecasts for FY26, FY27 and FY28 have all been revised upwards by 0.7%, 0.9% and 1.3%, respectively. After five consecutive quarters dominated by downgrades, the reversal in estimates suggests strengthening business conditions and improved visibility for the next two financial years.

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Amnish Aggarwal, who authored the strategy report, writes that the domestic economy is displaying early signs of synchronised recovery. A combination of softening inflation, a normal monsoon, improving rural sentiment, and the ongoing benefits of GST rationalisation are beginning to provide tailwinds to consumption. He adds that anticipated measures such as income-tax reductions and a potential 100 basis points rate cut in FY26 could reinforce the demand cycle even further.

Aggarwal notes that India’s macro fundamentals remain comparatively stable in the global context. “Inflation is cooling, the fiscal position is broadly aligned with guidance, and the current account gap remains manageable. These conditions support a more durable earnings environment for listed companies.”

Potential Near-Term Risk: A Softer Capex Cycle

One cautionary note in PL Capital’s outlook is the risk of slower government capital expenditure in the second half of FY26. Central capex has more than tripled since the COVID era, but the report suggests that the high base effect, weaker-than-expected tax collections and fiscal rationalisation could result in a ~10% year-on-year contraction if the government does not exceed its budget allocations.

Even so, PL Capital argues that domestic consumption is sufficiently well-positioned to offset some of this drag. Categories such as automobiles, electronics, discretionary retail, travel and services have shown meaningful revival through the festive and wedding seasons. With easing input costs and improving demand visibility, several consumer-oriented sectors are projected to benefit through FY26–27.

Sector Positioning for 2026: Banks, Consumer, Defence and Ports Lead

As part of its 2026 sector strategy, PL Capital maintains strong overweight positions in banks, NBFCs, consumer staples, consumer discretionary, defence, and ports. These are sectors the firm believes will benefit from structural domestic themes such as financialisation, premiumisation in consumption, and continued emphasis on indigenisation and logistics.

Banks remain the firm’s largest overweight segment. Healthy credit growth, stable asset quality and rising deposit traction place leading lenders in a favourable position as the earnings cycle turns. Consumer categories are supported by easing commodity prices, volume recovery and urban discretionary strength, while defence and capital goods continue to enjoy strong order books and policy support.

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By contrast, PL Capital stays cautious on IT services, citing sluggish global tech spending and slower decision-making cycles among US and European clients. The report also maintains an underweight stance on metals and commodities, where global price volatility and uneven demand continue to cloud earnings visibility.

Valuation Framework and Market Outlook

PL Capital uses a 15-year average forward price-to-earnings multiple of 19.2x to value the Nifty, applying it to its September 2027 EPS estimate of 1,515, resulting in the 12-month target of 29,094.
In alternative scenarios:

• A bull case valuation of 20.2x implies a potential level of 30,548.
• A bear case assumes a 10% valuation discount, placing the index near 26,184.

A Stronger Starting Point for 2026

The India Strategy Report concludes that Indian equities enter 2026 from a position of strength: corporate profitability is improving, earnings revisions have turned positive, domestic demand is firming, and institutional flows remain supportive.

As outlined by Amnish Aggarwal, India enters 2026 with a combination of improving earnings visibility, supportive macro fundamentals and broad-based domestic demand. If these conditions sustain, the report adds, Indian equities could be at the beginning of a more durable upgrade cycle.