Stock Market Expected to Rebound by 2nd Half of 2025, Nifty Could Reach 25,000
The recovery is projected to be driven by a resurgence in consumer spending, improved employment trends, and a decline in foreign investor selling.
Mumbai: A new report suggests that the Indian stock market could see a significant rebound by the second half of 2025, with the Nifty index potentially reaching 25,000 by December 2025.
Table of Contents
The recovery is projected to be driven by a resurgence in consumer spending, improved employment trends, and a decline in foreign investor selling.
Short-Term Volatility Anticipated
According to Emkay Institutional Equities, the Indian stock market is expected to remain volatile in the near term, particularly in the first quarter of 2025. This period may witness increased market fluctuations, mainly due to weak demand and ongoing global uncertainties.
Revival in the Second Half of 2025
Despite the volatility in the early months of 2025, the second half is expected to bring relief with a recovery fueled by a rise in retail lending, better liquidity conditions, and increased government welfare spending. This recovery is projected to boost market sentiment and support economic growth.
Optimism for Earnings Recovery
Nirav Sheth, from Emkay Global Financial Services, highlighted that the worst of the earnings downgrade cycle is likely behind us. The expected recovery in corporate earnings will be driven by renewed government spending and tax relief that will stimulate consumer spending. Sheth emphasized, “It is time to buy,” as the market is on track for an upturn.
Sector-Specific Outlook
Emkay Institutional Equities has an Overweight stance on certain sectors, including discretionary consumption, real estate, and healthcare. However, the firm remains cautious about sectors like financials, consumer staples, and materials due to concerns over valuation and structural challenges.
Also Read: Why Gyanesh Kumar’s Appointment as CEC Is Facing Backlash: A Detailed Analysis
Foreign Investor Selling Expected to Ease
Foreign portfolio investor (FPI) selling, which has been a major concern for the market, is likely to subside by the second quarter of 2025. This easing of FPI selling could help restore investor confidence in the Indian stock market.
Positive Outlook for Corporate Earnings
Corporate earnings are expected to improve, with mid-teens growth projected for FY26. Key drivers of this growth are expected to be financials, metals, and energy stocks.
Impact of US Dollar Index on Indian Rupee
The weakening of the US Dollar Index (DXY) could help stabilize the Indian rupee, further supporting the market’s recovery. A stable rupee will create a more conducive environment for investment.
Capex Growth to Slow but Rebound in FY26
Capex growth, which had a robust 31% CAGR between FY21-24, is likely to slow to 10-13% due to election-related spending constraints. However, a rebound in capex growth is expected in FY26 as policy clarity returns.
Long-Term Optimism Despite Short-Term Volatility
While short-term volatility is expected, Emkay Institutional Equities remains optimistic about the long-term potential of the Indian stock market, noting that a stable and consistent growth trajectory is likely once the market adjusts to the current fluctuations.
