Domestic brokerage Prabhudas Lilladher (PL) has predicted Nifty will reach 25,816 in the next 12 months. The firm has valued Nifty at a 15-year average PE (19.2x) with March 26 EPS of 1,344, and arrived at a 12-month target of 25,816 (25,810 based on 19x March 26 EPS of ₹1,358 earlier).

Nifty has demonstrated consolidation with a 4.4 per cent upmove over the past two months, despite market volatility during the elections.

Prabhudas also noted that the period saw strong domestic institutional investor (DII) inflows of ₹89,200 crore and foreign institutional investor (FII) outflows of ₹44,900 core.

The BSE small-cap and mid-cap indices surged by 57 per cent and 61 per cent, respectively, over the past 12 months — more than twice the gains seen in the Sensex, Nifty, and BSE 100.

Prabhudas said the realty, auto, metals, healthcare, and capital goods sectors have been among the top performers. “Hopes for normal monsoons and a shift towards defensive stocks in the current volatile environment have led to a resurgence in FMCG and consumer durables. However, private banks and IT services continue to underperform,” it added.

Brokerage stance on sectoral performance

Prabhudas has increased its overweight position on banks by 50 basis points due to strong credit growth and robust asset quality. The firm has increased its weightage on HDFC Bank slightly, where the incremental loan-to-deposit ratio is 80-82 per cent. Sustained growth in this area is expected to enhance valuations from their current low levels, it added.

For the healthcare sector, the firm is maintaining an overweight position by 240 basis points, as generic pharma players are set to benefit from favourable API prices and stable US pricing, while domestic growth is certain. The brokerage is reallocating some weight from Cipla to Sun Pharma due to better growth prospects. The company remains positive on hospitals, particularly Max Healthcare, with a significant overweight position.

In the consumer sector, PL has increased its weightage by 300 basis points, since its previous note, which has proven effective amidst election volatility and the anticipated rise in both urban and rural demand. The firm has now reduced weight in HUL and Titan by 50 basis points each..

For the automobile sector, the company has anticipated normal monsoon conditions will boost demand for entry-level bikes, benefiting Hero MotoCorp. It also expects sustained momentum and margin improvements in Mahindra & Mahindra’s (M&M) auto division, along with a projected resurgence in tractor growth. Additionally, Maruti would gain from any potential reduction in duties on hybrid cars.