Benchmark index Nifty 50 has tumbled almost 13 percent from its all-time high recorded in September 2024. However, international brokerage Citi Research sees the frontline making up the gains to hit the 26,000-level by December 2025, indicating a 13 percent upside from current levels.
As a result of the ongoing correction, the brokerage remains constructive on the markets, as the valuations for large-cap counters turns reasonable.
Further, Citi Research noted that the trio of direct income tax cuts, repo rate cut, coupled with a decline in inflation shall boost consumption, while public capex has been on a steady uptick since December 2024.
The brokerage reiterated its 'buy' rating on HDFC Bank, Kotak Mahindra Bank, Maruti Suzuki, Endurance Technologies, HDFC Life, Torrent Pharma, and MakeMyTrip.
On the sectoral front, Citi is overweight on banks, telecom and healthcare. On the flip side, the brokerage is underweight on IT, metals and consumer discretionary counters.
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“India’s EPS growth outlook remains robust and relatively low risk given the diversified universe of listed companies,” Surendra Goyal, Strategist at Citi said in a note earlier last month. However, Citi is cautious on any recovery in the private investment climate, which is says 'could remain elusive'.
The brokerage also said government expenditure is accelerating, and fiscal consolidation in FY26 is expected to be milder than in FY25. Meanwhile, the RBI is prioritising liquidity and reducing regulatory burdens, addressing key factors behind the recent slowdown.
Retail investors have also shown resilience, reinforcing the case for a market rebound. However, risks remain, including potential policy missteps, a deepening US market correction, and slower global growth. Despite these uncertainties, improving fundamentals set the stage for a broad market recovery in the near term, it had said.
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