Emkay Global has reiterated its March 2027 Nifty target of 29,000, projecting a 14 percent earnings growth for Nifty companies in FY27. This optimistic outlook is predicated on a broad macroeconomic and earnings recovery expected once the US-Iran conflict concludes.
The brokerage's stance comes despite renewed doubts over the US-Iran ceasefire. Recent reports indicated US President Donald Trump claimed Iran launched missile attacks on three US destroyers, which were reportedly intercepted. Conversely, Iran asserted the US targeted two of its ships in the Strait of Hormuz and conducted strikes on Iranian territory. Trump later downplayed the exchange as a "love tap," insisting the ceasefire remained in effect.
Emkay's Post-War Strategy and Sector Picks
Emkay Global continues to position its portfolio for a post-war environment, foreseeing a decline in oil prices and a robust consumption recovery across India. The firm believes the US-Iran peace deal remains a strong possibility, anticipating a resolution and the reopening of the Strait of Hormuz within weeks, even if current efforts prove to be another false start.
The brokerage's largest overweight positions are in consumer discretionary stocks, encompassing a diverse mix of internet, automotive, and retail companies. Industrials also remain a key overweight sector within its model portfolio.
While maintaining significant exposure to lenders, Emkay remains selectively underweight on the broader financials sector. Despite acknowledging strong tailwinds, the firm is slightly underweight on IT, citing definite long-term challenges, though it believes valuations may have already over-discounted some of these risks.
A substantial 25 percent of Emkay's overall portfolio exposure is dedicated to the theme of post-war oil price weakness. Key stock picks for this strategy include Larsen & Toubro (L&T) with a 7 percent weight, alongside HPCL (5 percent), Tata Motors CV (5 percent), Maruti Suzuki India Ltd (4 percent), and Delhivery (4 percent). Emkay anticipates crude oil prices to slip to USD 80 per barrel in the coming weeks.
Emkay notes that a "peace trade" appears to be returning, with media reports suggesting Iran is considering a US proposal for reopening the Strait of Hormuz, with a decision expected shortly. Brent crude futures for July have already corrected to USD 101 a barrel from a May 4 high of USD 114, reinforcing the firm's sanguine outlook despite the potential for further "false dawns."