Nifty at 27,958 in FY27? Here’s What Could Drive the Next Big Move

Mumbai | February 26

After spending nearly nine months in a narrow 5–6% range, Nifty now stands at an inflection point. The consolidation phase reflected earnings downgrades, tariff-related uncertainty and global volatility. But FY27 could mark the beginning of the next earnings-driven leg.

PL Capital has set a 12-month Nifty target of 27,958, valuing the index at 18.3 times December 2027 earnings a 5% discount to its 15-year average price-to-earnings multiple

Earnings Slow in FY26, Recovery Seen in FY27

The near-term picture remains muted. Nifty EPS growth for FY26 is expected at just 3.8%, following multiple estimate cuts over the past few quarters

However, the brokerage expects a sharp improvement thereafter. EPS growth is projected at about 17% in FY27 and 15% in FY28, indicating that the earnings cycle may re-accelerate after a pause year

In simple terms, FY26 may remain a consolidation year. FY27 is where growth could meaningfully return.

What Changes in FY27?

The macro backdrop has quietly improved.

The Union Budget has retained a strong capex push, with central government capital expenditure rising 11% and 22% including state participation, while maintaining fiscal discipline at 4.3% deficit

At the same time, India has concluded key trade agreements with the European Union and reached an interim arrangement with the United States. Tariff reductions and removal of punitive levies reduce export uncertainty and improve competitiveness for sectors such as textiles, gems and jewellery, auto components and engineering goods

Domestically, 125 basis points of rate cuts, GST rationalisation and income tax adjustments are beginning to reflect in demand indicators. Credit growth accelerated to 14.4% year-on-year by December 2025, signalling improving economic momentum.

Nifty FY27 Target: Bull and Bear Case Scenarios for the Next 12 Months

PL Capital builds its FY27 outlook under three valuation scenarios

In its base case, the brokerage values Nifty at 18.3x December 2027 earnings, arriving at a 12-month target of 27,958.

In a stronger outcome, where earnings surprises sustain and valuation multiples expand to 20x, Nifty could move toward 30,497, reflecting broader participation and improved investor confidence.

Conversely, if earnings downgrades persist and the index trades at a deeper 10% discount to long-period averages, Nifty could remain capped near 26,486.

The range suggests that FY27 is not just about direction, it is about earnings delivery.

Which Sectors Could Lead?

PL Capital remains overweight on banks, diversified financials, healthcare, consumer, auto and capital goods/defence

Auto, BFSI, cement, metals, telecom and ports are expected to report above-average earnings growth going into FY27

The shift is clear: leadership may tilt toward domestic cyclicals and capex beneficiaries rather than purely global themes.

Risks Investors Must Watch

Despite improving macros, the earnings downgrade cycle has not fully reversed. FY27 has seen a spike in downgrades across heavyweight sectors such as banks, consumer and oil & gas

Other risks include the impact of AI disruption, potential El Niño effects on rural demand, and interest rates being close to cyclical bottoms.

The Bottom Line

Nifty’s journey to 27,958 will not be linear. The index may remain volatile in the near term as FY26 earnings stay soft. But if FY27 delivers the projected rebound, the consolidation phase could give way to a fresh earnings-driven rally.

The easy liquidity-led rally is behind us. FY27 may be about disciplined positioning in sectors aligned with India’s capex, manufacturing and financial cycle revival.

To read the full India Strategy February 2026 report, click here.