Bernstein’s year-end target on the Nifty is 23,500, which is another 500 points below current levels on the index.
The Nifty 50 is currently down nearly 9% from the record high levels of 26,277, which the index had hit on September 27.
“Thanks to an elongated period of strong growth, most participants from policymakers to investors are still considering the slowing signs an anomaly. Once reality hits, we expect a further but limited moderation in the Nifty from current levels,” the Bernstein note said.
The brokerage, in May this year, had highlighted in a note that earnings upgrades will be hard to come by this year. The June quarter saw flat growth and the September quarter is also likely to follow the same path, according to Bernstein.
Over 65% of the NSE 100 companies have reported numbers so far, of which, 48% of those have reported a miss greater than 4%, which is the highest since March 2020. CNBC-TV18 had written about fears of the worst earnings downgrade in four years recently.
Here’s what Bernstein wrote about the earnings performance so far of various sectors:
- Banks: Helped by larger names
- IT: Finally seems to have hit bottom
- Autos: Hurt due to subdued demand
- Staples: Urban Slowdown
- Utilities, Cement, Industrials: Low demand due to weak capex and monsoons.
“The promise of a more fantastic future seems to have worked, putting significant pressure on the performance of these companies in the second half of financial year 2025,” the Bernstein note said. Most companies have guided for the second half of the year to be better than the first one.
Macros are also seeing signs of a slowdown across different indicators and the moderation here, according to Bernstein, will not be drastic but a significant reduction from the levels seen in financial year 2024.
Based on this, Bernstein advises a bottom-up play in select sectors.
