Amidst heightened volatility triggered by the escalating West Asia crisis and a sharp rise in crude oil prices, market experts remain constructive on India’s long-term earnings outlook, expecting the Nifty 50 to potentially scale the 28,000–30,000 range by the end of FY27.

“We expect NIFTY 50 to be in the range of 28,000–30,000 in FY27, a potential upside of nearly 15%–25% from current levels, supported by continued strength in sectors such as Banking, Capital Goods, Telecom, and domestic manufacturing themes,” said Ashwini Shami, smallcase Manager, President and Chief Portfolio Manager, OmniScience Capital. He made this prediction in a webinar hosted by smallcase and moderated by Ambareesh Baliga, smallcase manager & Market Analyst.

Indian equities have witnessed a sharp correction in the past two months as geopolitical tensions in West Asia pushed Brent crude prices above the $105-per-barrel mark, raising concerns over inflation, India’s current account deficit, foreign fund outflows, and corporate margins.

The benchmark Nifty 50 currently trades around the 23,640 level and has declined nearly 10% on a year-to-date basis, while correcting around 4% over the past one month amid sustained global uncertainty and risk-off sentiment.

Despite the near-term turbulence, smallcase managers believe FY27 is likely to remain an earnings-led market rather than a valuation-driven rally, with investors expected to focus on companies with strong profitability, execution capabilities, and sector-specific growth visibility.

Speaking during a webinar on the theme “FY27 Market Compass: Earnings, Equity & Sectoral Outlook”, market experts said FY27 is likely to remain an earnings-led market, where investors may focus more on sustainable profitability, execution quality, and sector-specific opportunities instead of aggressive re-rating.

According to smallcase managers, FY27 EPS estimates for the NIFTY 50 are projected in the ₹1,280-₹1,320 range, with the benchmark index expected to trade within a valuation band of 22x–24x earnings. They believe the outlook remains supported by India’s domestic growth momentum and resilient corporate profitability.

Anuj Jain, CIO and Co-Founder of Green Portfolio Private Limited, said sectors linked to India’s domestic capex and manufacturing cycle - including capital goods, industrials, defence, and BFSI - continue to offer favourable earnings visibility and policy support. He added that defensive pockets such as pharma and select FMCG companies could provide portfolio stability amid heightened volatility, while IT services may gradually recover as global demand conditions improve.

Sneha Jain, Founder and CEO of Wealth Trust, said investors should increasingly focus on businesses with global revenue bases and companies moving up the value chain, amid shifting global economic power dynamics and rising uncertainty in the U.S. market environment.

Oil import bill may hit $132 billion in FY27

On the macro front, smallcase managers cautioned that the ongoing West Asia conflict and elevated crude oil prices remain key risks for India’s economy. India imports nearly 85% of its crude oil requirement, making it vulnerable to global energy price shocks. According to their estimates, India’s net oil import bill could rise from around $123 billion in FY26 to nearly $132 billion in FY27, potentially widening the current account deficit to around 1% of GDP from 0.7–0.8% in FY26.

They also warned that every 10% rise in crude oil prices could increase WPI inflation by 80–100 basis points and CPI inflation by 40–60 basis points, potentially weighing on growth and consumer demand.

Reviewing FY26 trends, the managers said markets were driven more by volatility than broad-based weakness, as geopolitical tensions, fluctuating foreign flows, elevated crude prices, and valuation concerns overshadowed strong domestic fundamentals. While large-cap stocks remained relatively resilient, broader markets witnessed sharp divergence, making disciplined stock selection increasingly important.

On sectoral performance, consumer discretionary, materials, real estate, telecom, and capital goods emerged as key outperformers during FY26, while chemicals, FMCG staples, healthcare, and communication services lagged. Banking and telecom delivered stable earnings growth, whereas metals benefited from strong domestic infrastructure demand and export growth.

Ambareesh Baliga, market analyst and smallcase manager, said small- and mid-cap stocks are likely to outperform large caps in the foreseeable future, supported by pockets of valuation-performance mismatch and selective earnings opportunities.