The Nifty index might experience significant fluctuations in the coming months, swinging between negative 11 percent and positive 4 percent from its year-end target of 25,000. This volatility stems from a mix of evolving macroeconomic risks, according to a recent report by BofA Securities. Investors are bracing for potential trade tariffs, shifting US economic conditions, and policy adjustments from central banks like the Federal Reserve and the Reserve Bank of India (RBI).
The report highlights several key concerns weighing on the market. Among them are possible US trade tariffs on Indian exports, an uncertain US macroeconomic outlook, delayed policy responses, and the political implications of upcoming state elections in six major Indian states. These states collectively account for more than 16 percent of India’s public subsidy and capital expenditure spending.
BofA Securities has maintained its year-end Nifty target of 25,000 but warns that the index could fluctuate significantly around this mark. The movement will largely depend on how markets react to developments such as trade policies, US economic indicators, and potential fiscal stimulus measures to counter tariff impacts.
Earnings growth for Nifty-listed companies is also expected to remain sluggish. The firm projects just 7 percent growth in FY26 and 11 percent in FY27, figures that fall short of broader market expectations of 9 percent and 15 percent, respectively. Instead of sustained rallies, each earnings season could bring corrections as investors adjust to weaker-than-anticipated results.
There might be a silver lining if India introduces timely legislative and fiscal reforms. These could be funded through higher RBI dividends, asset sales, fuel duties, or leveraged capital expenditure projects. Such measures could provide a much-needed boost to market sentiment and economic momentum.
Meanwhile, recent market trends paint a grim picture. Both the Nifty 50 and the BSE Sensex have extended their worst losing streak in over two decades, underperforming expectations. The Nifty has declined by about 3 percent so far, contributing to a cumulative drop of around 12.6 percent from its September 2023 peak. The Sensex has followed a similar trajectory, slipping nearly 11.7 percent from its all-time high.
Market watchers remain cautious as global and domestic uncertainties continue to influence investor behavior. With many variables still in play, the coming months could be decisive for India’s stock market trajectory.