Despite surge in oil prices, Emkay retains bullish India view; sees Nifty at 29,000 by March 2027

Emkay Global Financial Services has maintained a constructive outlook on Indian equities despite ongoing geopolitical tensions and elevated crude oil prices, projecting the Nifty to reach 29,000 by March 2027 at a target valuation of 19.2 times FY28 earnings. 

In its latest India Strategy report, the brokerage said near-term volatility could continue due to the prolonged West Asia conflict and pressure on global energy markets. However, it believes India’s strong domestic macroeconomic fundamentals, resilient corporate earnings and policy support continue to provide a solid foundation for long-term growth. 

The report noted that the Q4FY26 earnings season has started on a stable note, with nearly 20% of Emkay’s coverage universe having announced results so far. Among these, 46% of companies reported earnings above expectations while 29% missed estimates, indicating broad-based resilience across sectors despite external uncertainties. 

Agency retains FY27 Nifty EPS estimate 

Emkay retained its FY27 Nifty earnings-per-share (EPS) estimate at ₹1,230 and continues to expect earnings growth of nearly 13%, reflecting confidence in India Inc.’s ability to weather near-term global headwinds. 

The brokerage noted that Indian equities have lost some valuation comfort recently, with the Nifty currently trading at around 19.2x FY27 forward earnings, close to its five-year long-term average. However, it said any sharp market correction driven by global concerns should be viewed as a tactical buying opportunity rather than a structural risk. 

The firm remains overweight on discretionary consumption, materials, industrials, and real estate while maintaining an underweight stance on financials, energy, healthcare, staples, telecom, and technology in the near term. 

A major concern flagged in the report is the ongoing closure of the Strait of Hormuz, which has remained shut for more than 11 weeks amid escalating tensions in West Asia. The disruption has pushed Brent crude prices into the $105–110 per barrel range, raising concerns over India’s macroeconomic stability due to its heavy reliance on energy imports. 

According to Emkay’s scenario analysis, if Brent crude remains at $100 per barrel, India’s current account deficit could widen to 2.4% of GDP from the pre-shock estimate of 1.3%. GDP growth could slow to 6.3% from the baseline estimate of 7% while CPI inflation may rise to 4.6%. 

In a more adverse scenario where crude oil rises to $130 per barrel, the brokerage estimates India’s GDP growth could decline further to 5.5% while inflation could climb to 5%, increasing pressure on policymakers and household spending. 

Seshadri Sen said India’s structural growth drivers remain intact despite ongoing geopolitical risks. “Earnings resilience, policy support, easing domestic inflationary pressures and ongoing capex investments continue to provide a strong foundation for Indian equities. We believe any near-term market weakness should be viewed as an opportunity for long-term portfolio positioning,” he said. 

The report added that the recent ₹3 per litre increase in fuel prices addresses only around 20% of the under-recoveries faced by oil marketing companies, indicating that further fuel price hikes may become necessary if crude prices remain elevated. 

Emkay described sustained high energy prices as a “four-way drag” on the economy, affecting inflation, corporate profitability, government finances, and consumer spending simultaneously. 

Optimistic on India’s medium-term economic trajectory 

Despite these risks, the brokerage remains optimistic on India’s medium-term economic trajectory. It highlighted supportive domestic policy measures, including income tax cuts, GST reductions and cumulative RBI rate cuts of nearly 125 basis points since February 2025, which are expected to improve liquidity, support discretionary spending and revive private investment. 

The government’s continued capital expenditure push in sectors such as railways and defence is also expected to drive economic activity and employment generation. 

The report further noted that although elevated oil prices and a stronger US dollar could continue to pressure the rupee in the near term, the Reserve Bank of India is likely to maintain a cautious policy approach to preserve macroeconomic stability. 

Emkay expects pressure on the rupee and bond yields to ease once geopolitical tensions subside and the Strait of Hormuz reopens, which could improve investor sentiment. The brokerage said markets are still under-pricing the potential earnings recovery expected over FY27 and FY28, with Indian corporates likely to deliver earnings growth of nearly 14% over the next two financial years. 

It also said a diplomatic resolution to the Iran conflict and the normalization of crude oil supply routes could significantly improve market sentiment and revive consumption-led growth. 

On the financial sector, the report highlighted a strong re-rating cycle in the NBFC segment over the past two to three years, supported by improved asset quality, stronger capitalisation and robust growth relative to traditional banks. 

Avinash Singh said select NBFCs remain well-positioned to deliver healthy long-term growth despite a stabilising interest-rate environment. 

The report also projected strong growth momentum in the domestic automobile sector, with industry volumes expected to rise from 36.6 million units in FY26 to nearly 42.8 million units by FY28. 

According to Emkay Research, demand growth across two-wheelers, passenger vehicles and commercial vehicles, along with accelerating electric vehicle adoption and premiumisation trends, is expected to continue supporting the sector’s expansion.