Daily Voice: Axis Securities' Naveen Kulkarni sees scope for 8-10% upside in Nifty over next few months

There is a good chance that Nifty 50 can deliver another 8-10% upside from the current levels. Sequentially, earnings have the possibility of improvement as the base for Q1/Q2 FY26 quarters is soft. Moreover, the liquidity situation has improved with the actions taken by the RBI.

The government’s clear focus is growth, and the BFSI sector, with the highest weight in the index, is expected to see improvement. Thus, the scope for further 8-10% returns has increased immensely.

Which sectors do you believe will lead the market to a new high in the coming months?

As indicated earlier, there is a potential for an 8-10% increase in the market from current levels over the next few months. This upside suggests that markets may touch new highs. However, earnings over the next couple of quarters will remain critical, as global risks have increased, and the market may not see any re-rating trends from current levels.

Are you increasing your exposure to the consumption sector?

We are not increasing exposure to the consumption sector as earnings for the sector continue to remain tepid. However, the base will become favourable in the forthcoming quarters, but a meaningful pickup in consumption activity is not being witnessed. We would evaluate the sector in H2 FY26 based on the pickup in on-the-ground activity.

Do you see strong earnings visibility in the financial space, especially following the recent RBI move?

Earnings visibility in the financial space has improved but based on the recent move by the RBI, the sector has better potential for growth as liquidity situation has eased. The banks will face challenges on deposit mobilisation but the cut in CRR is likely to cushion the impact on the Net Interest Margins.

What is your view on the cement and industrial sectors, given that private capex has yet to pick up meaningfully?

The cement sector has seen multiple rounds of price hikes, especially in the southern region, in the recent past. While the current quarter may not see any significant traction, as it is a lean period, the sector is likely to deliver good results for FY26. Thus, cement is a good sector to increase exposure.

Industrials reported a decent set of numbers in Q4FY25 and expect the traction to continue in FY26, as government capex is likely to see reasonable growth. Private capex is cyclical and bunched up

Do you currently hold significant exposure to the defence sector in your portfolios, or do you find valuations in the space expensive?

We find the valuations in the defence sector to be expensive, but we are scouting for companies with strong capabilities and sustainable growth. In these segments, high valuations could sustain and meaningful returns are possible over the medium term.

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