PL Capital expects Nifty to log an earnings growth to fall two percentage points in FY26 as country enters a challenging phase due to increasing geopolitical tensions, rise in crude oil prices and disruptions in the global supply chains.
The benchmark index will register a 4 per cent earnings growth in the financial year ended March, 2026 against 6 per cent logged in FY’25, according to the India Strategy report published by PL Capital.
The medium-term forecast suggests a compounded annual growth rate of 15 per cent for Nifty over fiscal years 26-28.
Valuation discount
The Nifty is currently valued at 17 times its one-year forward earning multiple, which amounts to a 12.4 per cent discount from its historical average of 19.4 times, which covers 15 years.
In the base case scenario, the valuation is assumed will be 17.5 times, 10 per cent discount from its historical average based on FY28 earnings per share of 1,551, leading to a target price of 27,080, it said.
The Nifty has fallen by 6.6 per cent over the last three months due to continued foreign institutional investor redemptions against the backdrop of geopolitical instability, especially the West Asia crisis.
Though there has been a significant rally after touching the lowest levels recently, market conditions remain choppy on the back of global risks and increasing commodity prices, it said.
The rise in the price of crude oil will lead to higher costs in the import of oil by over $70 billion annuallyr, which may lead to inflation rising above 5 per cent.
Further, supply chain disruptions and the possibility of El Nino effect on the monsoon season might lead to inflation becoming higher. GDP growth, currently at about 6.5 per cent can further dip to 6 per cent.
Oil prices have seen a sharp spike and are unlikely to revert to pre-war levels. India, which imports 4.3 million barrels of crude per day valued at $180 billion, could see its import bill rise by over $70 billion annually.
Amnish Aggarwal, Co-Head Institutional Equities, PL Capital said though India’s growth fundamentals look intact in the longer term, near-term challenges related to inflation, interest rate concerns and foreign demand are likely to impact economic growth.
The current market valuations are already considering these headwinds, but any sustained turbulence may result in further earnings downgrades, he added.
Published on April 21, 2026