Expert view: The Indian stock market is losing sheen as it has slipped to the seventh slot in global market cap rankings, making way for Taiwan and South Korea’s stock markets. The underperformance of the Nifty 50 has also put it on track to record the first annual decline after a decade of positive gains.
However, going ahead, Ashwini Shami, President & Portfolio Manager, Omniscience Capital, is optimistic that the end of the West Asia conflict and even moderate earnings growth could reverse the fortunes in favour of Nifty bulls.
The Nifty 50 is down over 8% YTD. Is it possible for the index to record its first annual decline in over a decade?
From a valuation perspective, the Nifty 50, at a price-to-earnings multiple of 20.3x, is trading below its long-term average. While the market could fall further for multiple reasons, valuations are not a major concern. Although FY27 margins may see some compression due to inflationary pressures, even moderate single-digit earnings growth, coupled with a market re-rating as the West Asia crisis eases, could result in double-digit returns for the Nifty from current levels.