Recovery expected to be driven by banking stocks, telecom and bottoming out of largecap IT stocks; small- and midcaps favourable due to value correction & earnings growth recovery
Mumbai, 16th June: The Nifty 50 to reach 27,000–28,000 during CY2026, implying meaningful upside from current levels (~23,600). The company estimates Nifty50’s EPS (earnings per share) at 1251 for FY27e and 1443 for FY28e. The outlook is supported by India’s structural growth story, a recovery in corporate earnings, an ongoing capex cycle, and the positive impact of a stable monetary policy environment on economic activity.
According to MNCL, India’s long-term growth trajectory continues to strengthen on the back of structural reforms such as GST, RERA, the Production Linked Incentive (PLI) scheme, corporate tax reforms, infrastructure investments, and increasing formalization of the economy. The firm believes these reforms, combined with favourable demographics, rising financialization of savings, strong foreign exchange reserves, and manufacturing shifts toward India, create a strong foundation for sustained earnings growth across sectors.
Positive on midcaps and smallcaps
Gaurav Bhandari, CEO, Monarch Networth Capital Limited, said, “India remains one of the most compelling structural growth stories globally. The cumulative impact of reforms undertaken over the past decade is beginning to reflect in corporate balance sheets, formalization trends and earnings growth.
India Inc’s resilience is also evident in corporate capex growth of the top 500 listed non-financial companies, which has nearly doubled to ~₹10 lakh crore versus pre-pandemic levels. At the same time, balance sheets have strengthened significantly, with net debt-to-equity ratios falling to multi-year lows and operating cash flow generation remaining healthy. These factors position corporate India to accelerate investments and drive the next leg of earnings expansion.”On the market outlook, Bhandari adds “The correction witnessed in large-cap sectors due to sustained FII selling appears excessive relative to underlying fundamentals. We expect Nifty recovery to be led by banking stocks, telecom companies and a gradual improvement in large-cap IT. At the same time, we are even more constructive on select small and midcap (SMID) companies where time correction, earnings growth, and valuation normalization over the last 18 months have created attractive stock-picking opportunities. We expect the MidCap 150 to reach ~25595 levels and the Nifty SmallCap 250 to reach ~19,640.”
Sustained low-interest rate environment expected to benefit small- & midcap companies
On the attractiveness of SMID stocks, MNCL believes the current rate-cut cycle could act as a significant catalyst for companies in the segment. “Historical trends indicate that easing monetary policy has generally supported strong post-cycle returns across midcap and smallcap indices. Lower interest rates support economic activity, improve revenue growth prospects, enhance operating leverage and reduce financing costs, creating multiple tailwinds for well-managed businesses,” adds Bhandari.
Top stock picks
State Bank of India (SBI): MNCL believes SBI offers an attractive risk-reward opportunity supported by strong asset quality, healthy loan growth, sustainable profitability and potential value unlocking through subsidiaries. Despite delivering profitability metrics comparable to leading private banks, SBI continues to trade at a valuation discount.
Himachal Futuristic Communications Limited (HFCL): HFCL’s strong earnings turnaround, record order book, growing export business and exposure to long-term themes including 5G rollout, data centre infrastructure, defence manufacturing and fibre demand make it a strong pick for MNCL.
Hindustan Copper: MNCL sees significant long-term potential in Hindustan Copper driven by India’s growing copper demand, capacity expansion plans under its Vision 2030 strategy, and its unique position as India’s only vertically integrated copper producer.
(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing.)
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