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Iran-Israel war priced in; Nifty 50 to hit 27,500-28,000 by year-end: Chakri Lokapriya, LGT India
Expert view: Voicing his bullishness on the Indian stock market despite rising geopolitical risks, which he believes are largely priced in, Chakri Lokapriya, CIO, Equities, LGT India, predicts another 10-12% upside in the Nifty 50 over the next six months. Ahead of the earnings season, the veteran market expert sounds bullish on the real estate and banking sectors. The CIO has also shared his top stock to buy ideas for solid returns over the next year.
Despite rising geopolitical tensions, particularly the Iran-Israel conflict, markets have shown surprising resilience. Much of the potential downside has already been priced in, allowing equity indices to hold ground amid volatility.
June has seen crude oil prices spike 17% in response to fears of regional escalation and due to U.S. involvement. However, oil remains down 11% over the past year, and year-to-date prices are largely flat. This stability implies no significant changes to India's oil import outlook or economic growth projections. We credit the RBI's swift and steady policy actions to enable the market's ability to absorb such developments.
We expect the Nifty 50 to reach 27,500 to 28,000 by the end of 2025—an upside of around 10% to 12% from current levels. The bullish view is underpinned by expectations of an earnings recovery over the next couple of quarters, following what we believe to be a bottoming out in Corporate India's performance.
The key risks to this outlook include a further escalation in Middle East tensions and prolonged trade uncertainty with the U.S., both of which could act as headwinds.
With the market trading at approximately 21 times one-year forward earnings, valuations appear reasonable. We see this as an opportune time for investors to consider entering or adding to their equity positions, especially with an 18-month investment horizon.
Defence has emerged as a standout sector this quarter, buoyed by a string of global and regional conflicts that have reshaped geopolitical priorities. From the Russia-Ukraine war to the Israel-Iran flare-up, defence spending is on the rise globally. European nations are pledging up to 5% of GDP toward defence, while India is doubling down on indigenous manufacturing under its 'Make in India' and 'Atmanirbhar Bharat' initiatives.
We believe several key players in India's defence ecosystem, such as Bharat Electronics Ltd (BEL),
Hindustan Aeronautics Ltd (HAL), Bharat Earth Movers Ltd (BEML) are long-term beneficiaries of both domestic procurement and export opportunities.
With the first-quarter earnings season approaching, market watchers are bracing for a mixed bag. The RBI's recent 50-basis-point rate cut—larger than market expectations—is expected to compress bank margins in the near term. However, the move could drive loan growth and benefit lenders with strong retail books. Winners: Real Estate (boosted by lower home loan rates), Banks (due to higher loan volumes)
Laggards: Consumer Staples with low pricing power.
We believe that select infrastructure and railway stocks as strong medium-term plays:
REC Ltd and Power Finance Corporation (PFC): These infrastructure financiers stand to benefit from relaxed RBI provisioning norms, including reduced standard asset provisions and income recognition on an accrual basis for deferred projects.
Titagarh Rail Systems: Seen as a long-term growth story, this railway manufacturer is expected to capitalise on robust government capex and secular growth in domestic rail infrastructure.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
