Nifty EPS Predictions by Abhay Agarwal: Market Valuations at a Crossroads
Nifty EPS Predictions Under Scrutiny
The recent comments from Abhay Agarwal shed light on the potential for Nifty to face a cyclical downturn, resulting in softened market valuations. Consumption trends leading up to the Diwali season indicate a continuing lack of demand, with weak performance in discretionary sectors such as autos and home improvements.
Market Overview
As we approach the festive season, Agarwal notes that low consumption patterns suggest a weak offtake in products typically purchased during this time. It creates an environment of nervousness around upcoming earnings announcements and suggests an impending cyclical shift in market dynamics.
The Shift in Market Sentiments
- The transition of market patterns from a buy on dips to a sell on rallies may continue until clear signs of recovery are visible.
- Agarwal holds around 20% cash in the portfolio, indicating a strategy to navigate through potential market corrections.
Cyclical Downturn's Impact on Nifty EPS
Agarwal emphasized that the current situation is not indicative of a structural downturn but rather a cyclical adjustment. He forecasts that Nifty EPS estimates, which began at Rs 1252 for FY26, could drop below Rs 1200 soon as earnings continue to come in lower than expected.
Looking Ahead
- Agarwal notes that as earnings estimates decline, P/E multiples might have to adjust accordingly, potentially yielding a Nifty level around 21,600.
- Investors should keep an eye on mid and small-cap IT companies, which may offer better growth opportunities compared to their large-cap counterparts.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.