Samvat 2083 outlook: Brokerages see double-digit stock market returns as Nifty valuations ease

ICICI Direct expects Indian equities to deliver healthy double-digit returns, while Kotak Neo believes sustained earnings growth could support the market despite near-term global uncertainties. Both brokerages see the recent correction largely as a valuation adjustment rather than a sign of weakening domestic fundamentals. Strong Q2 earnings signal improving corporate performance In its latest Diwali strategy note for Samvat 2083, ICICI Direct highlighted encouraging trends in the ongoing Q2FY27 earnings season.

Companies that have reported results so far have delivered more than 20 percent year-on-year growth in both revenue and profit after tax (PAT), suggesting that the domestic corporate earnings cycle is gathering momentum. The brokerage noted that mid- and small-cap companies have performed particularly well, with profit growth exceeding 30 percent year-on-year. Kotak Neo also pointed to improving earnings momentum, noting that Nifty 50 companies recorded their strongest year-on-year earnings growth in 11 quarters during Q1FY27.

The brokerage expects the momentum to continue, projecting Nifty 50 earnings growth of around 18 percent in FY27 and 13 percent in FY28. While geopolitical tensions and unpredictable foreign investor flows remain key risks, sustained buying by domestic institutional investors (DIIs) continues to provide support to Indian equities. Nifty valuations offer a more favourable entry point After the recent market correction, valuations have become more reasonable, improving the risk-reward equation for long-term investors.

According to ICICI Direct, the Nifty 50's two-year forward price-to-earnings (P/E) ratio stands at 16.6 times, below its 10-year average of 18.2 times. The brokerage believes that this moderation, coupled with improving earnings visibility, has made quality stocks increasingly attractive. Analysts see the correction as an opportunity for investors to gradually accumulate fundamentally strong companies rather than attempt to time the market.

Kotak Neo also highlighted the expanding range of investment opportunities in India, driven partly by a steady pipeline of initial public offerings (IPOs). While new listings can temporarily absorb domestic liquidity, the brokerage believes they ultimately broaden the investment universe and strengthen the country's capital markets. Earnings, not liquidity, could drive the next market rally Looking ahead, ICICI Direct expects corporate earnings growth to play a bigger role in driving stock market returns, rather than gains fuelled primarily by liquidity or higher valuation multiples.

The brokerage sees no material risks to its estimate of 16 percent compound annual growth in Nifty earnings over FY26-FY28. It remains positive on Indian equities, citing a firm growth outlook and valuations that have moderated below their historical averages. Kotak Neo shares the constructive long-term view, maintaining that India's structural growth opportunities remain intact despite geopolitical uncertainty and global market volatility.