Limited upside ahead as Nifty poised to trade in 24,200-25,500 range for next 2-3 Months: Nikhil Ranka

Economic Times

3 days ago

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"So, this is what I would say on the hits on misses. In terms of the consensus earnings for FY27, six-eight months back we were at close to 1,380 rupees if you look at the EPS estimates for FY27, that number is now down to almost 1,300, 1,310 rupees. So, close to 5% to 6% earnings downgrade is what we have seen in the last two quarters," says Nikhil Ranka So, broadly, if you look at it, the earning season has not panned out that great. On the IT side, we have seen quite a bit of negative surprises because there was uncertainty because of this tariffs and because of that as we head into Q1 a lot of decision making has got deferred and therefore, my sense is it has seen some downgrades and over the course of the year we will continue to see some downgrades in it on the back of that.On the pharma side also this result season has been pretty subdued and the problem there is that Revlimid was a big contributor to earnings for most of the pharma companies and it goes off patent in Jan 2026.Right now, we do not have the visibility as to what new drugs will be able to fill that big void that will be created by Revlimid going off patent. And therefore, pharma also should have a very challenging FY26 in that sense. On the positive side, telecom could prove to be a pretty defensive sector as we head into FY26.One, we are seeing problems with Vodafone not going away and therefore, the top two guys should continue to see subscriber addition and three-four months down the line we should again have some sort of tariff hike coming through. So, this is what I would say on the hits on misses. In terms of the consensus earnings for FY27, six-eight months back we were at close to 1,380 rupees if you look at the EPS estimates for FY27, that number is now down to almost 1,300, 1,310 rupees. So, close to 5% to 6% earnings downgrade is what we have seen in the last two quarters.So, my sense is the easy money is already off the table in market. So, we have seen markets rallying from almost 21,800, 22,000 levels that we hit in Feb end to now back to close to 24,800 level. So, we have seen a 3,000-points move on Nifty. And if I give the median multiple of 20 times, then probably we are staring at a single digit upside in index over the next nine months so to say. So, my sense is we will consolidate in this broad range of probably closer to 24,200 on the downside and 25,500 on the higher side.We need to consolidate two-three months here. We have to see how earnings pan out for Q1 and Q2 and what commentary we get from management because right now what is happening is we are continuously seeing earnings downgrade quarter after quarter and for markets to gain momentum and re-rate from that 20x levels, we at least need one quarter where we again get to double-digit earnings growth and we start to see some sort of upgrades on the market.So, the base case clearly is that we will have a market which will consolidate here for some time, next two-three months could be pretty muted for the markets from here.