Mumbai, India – Renowned market veteran Raamdeo Agrawal, Chairman and Co-founder of Motilal Oswal Financial Services, has forecasted a significant 40-50% upside for the Nifty index within the next two to three years. In an exclusive interview, Agrawal stated that the market is currently scraping the bottom, with limited downside potential compared to the expected gains.
Roaring Earnings Growth Expected
Agrawal predicts a period of "roaring earnings growth" over the next year, primarily driven by a base effect. He emphasized that the market has not yet fully priced in this anticipated growth, presenting a unique opportunity for investors.
"Your downside-to-upside ratio is looking extremely favourable for investors. Your downside is maybe 5-7 per cent, or even 10 per cent, but upside is 50 per cent," Agrawal told Business Today TV.
Following stronger-than-expected corporate results in the September quarter, Motilal Oswal Financial Services has already raised its earnings estimates for the Nifty. The brokerage increased its FY27 earnings per share (EPS) estimate by 1.1% to Rs 1,247 and its FY28 estimate by 1.6% to Rs 1,428.
Navigating Global Uncertainties
While acknowledging that equities are inherently a risk market, Agrawal believes that the current risks are significantly lower than the potential returns. He noted that despite ongoing global uncertainties, factors are slowly aligning in favor of the Indian market.
Key global factors discussed include:
- AI Trade: Agrawal highlighted that while AI initially posed challenges for Indian IT, this trend is now reversing, suggesting a more favorable outlook.
- Oil Prices: He expects oil prices to decline eventually due to ample supply and stagnating global consumption, mitigating a long-term concern.
- Rupee Stability: The market veteran pointed to the rupee's weakness and substantial short positions in the futures market. He believes a stronger, more stable rupee will restore confidence among foreign investors, whose earnings are already robust.
Market Momentum and Investor Strategy
Drawing on his four decades of experience, Agrawal observed a consistent trend: market momentum strengthens significantly in years marked by accelerating earnings growth. He advised investors to participate in the market during the earnings build-up phase, rather than waiting until growth is fully realized, to achieve extraordinary returns.
"We have to be in the market while the earnings growth is building up, not after seeing all the earnings are built up. Because by that time, what will happen is the market would have moved and if investors come after that, they may not make extraordinary returns," Agrawal explained.
He added that the current period offers an opportune moment for investors to buy at reasonable prices, as the market has yet to fully anticipate the forthcoming earnings surge.