Expert view: Snaha Poddar, VP of research at Wealth Management, Motilal Oswal Financial Services, expects the Nifty 50 to end with healthy profits this year. She believes that GST reforms, India’s upgrading of the sovereign rating after 18 years, RBI’s liquidity support and government stimulus should help the growth of earnings. In an interview with Mint, Poddar shared her view on the Indian stock market, current valuations, sectors she is positive about, and the strategy for the middle and small CAPS. Here are edited excerpts from the interview: Nifty has seen a modest profit of 6% year to date. Where do you see the index at the end of 2025? The Indian stock market is volatile and muted this year, weighed by poor earnings and global winds, including geopolitical problems. That said, we believe that the impact of US rates on India will be quite limited. Looking forward, the setup for the rest of the year is constructive. Factors such as GST 2.0 Rollout, India’s upgrading of sovereign rating after 18 years, RBI’s liquidity support and government stimulus should help the growth in earnings. A normal monsoon, rising rural income and festive demand add further winds. So, although the Nifty 50 has only earned about 6% so far this year, we expect the index to bear a positive bias and finish 2025 on a better note. How do you see the current valuation of the market? Do you find it sustainable? Market valuations now seem pretty reasonable. Nifty trades about 21 times in advance, which is broadly in line with the long -term average. What is more encouraging is the shift we saw this term-from muted single-digit earnings growth last year to a more steady two-digit track, with a broader participation in the sector. With the FY26 earnings expected to grow by about 10%, supported by GST reforms, rate cuts and the demand for festive guided, valuations are sustainable. Of course, global uncertainties can be limited in the short term, but the combination of reasonable valuations and improving the earnings momentum suggest that the market can still produce healthy returns at the end of the year. What is the reason behind the underperformance of bank shares? Is this the right time to buy it? Bank shares have recently been poor, mainly due to slower credit growth, margin pressure and demand for soft loans during the last few quarters. Rising tensions in unsecured loans and MSMEs have also contributed to concern, while high glyps harms profitability. That said, things need to start to improve from the second half of FY26, with consumption and industrial demand that jumps back. The margins are likely to recover as the comfort of deposit costs, CRR cuts kick in and credit costs normalize. Retail asset equality and MFI also show early signs of stability. Banks with strong deposit franchises look like good congestion bets. What sectors are the next one to two years under your investment radar? On the sectoral front, we are positive about domestic themes, given the economy benefits due to the announcement of GST 2.0 and thus such as car, consumer names, cement, hotels, insurance and retail. We are also positive about EMS (electronic manufacturing services), industries and capital market games. EMS benefits from the government’s “make in India” pressure and rising digital penetration. Industrials will do well as both public and private captex picks, supported by tariff cuts and policy winds. In capital markets, rising retail participation and steady SIP flow intermediaries and AMCs should help, although stricter F&O regulations are a risk. So our strategy is to remain overweight in these sectors and focus on scale leaders, execution strength and visibility of earnings. What should our approach to the IT sector be? Do you see value come up in it? The IT sector has gone through a rough patch, with revenue not moving much and margins hit by wage increases. Customers are still signing transactions, but their decision -making is slower due to global uncertainty and their focus on cost control. Within the near term, growth is likely to be gradual, which is more driven by the consolidation of the seller and some genai-related projects than through a broad recovery. A large, sector -wide turnaround is unlikely to happen before FY27. That said, valuations have cooled to more reasonable levels. For a strong re -evaluation, we need to see clearer signs of a new technical investment cycle, discretionary expenses that return, and Genai showing meaningful monetization. So, for the time being, it’s more about choosing the right businesses in it, rather than expecting the entire sector to jump back quickly. We think that the mid-single-digit growth in FY26 with a degree of margin recovery in the second half looks realistic. What should our middle and small-cap segments strategy be? What are the bags of opportunities? Mid-Caps have produced the healthy growth of 24% in Q1FY26 and are estimated to be yielding a year-on-year growth in FY26E year-on-year (yoy). The earnings review cycle was also favorable, with the FY26E estimates slightly upgraded, and valuations in many bags reasonable. However, petty caps still offer a more mixed picture. They reported an 11% drop in the year in Q1FY26 and had a 4% cut in the FY26E estimates. Nevertheless, we expect earnings to bounce back in the second half and deliver 30%+ earnings growth in FY26E. This sharp recovery potential is counteracted by valuation problems, which makes the segment less attractive on a broad basis. Midcap and small cap stocks are currently trading at a premium to their long-term average p/e-multi-folds. Therefore, it is important to be selective and focus on companies that provide strong growth potential while maintaining reasonable valuations. A connecting awards strategy is advisable to reduce volatility in the short term. Read all market -related news here read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not coin. We advise investors to consult with certified experts before making investment decisions, as market conditions can change quickly and conditions can vary.
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