{"id":5147,"date":"2025-03-11T14:40:09","date_gmt":"2025-03-11T09:10:09","guid":{"rendered":"https:\/\/trending.niftytrader.in\/?p=5147"},"modified":"2025-03-11T14:40:09","modified_gmt":"2025-03-11T09:10:09","slug":"niftys-slide-may-continue-as-weak-earnings","status":"publish","type":"post","link":"https:\/\/www.niftytrader.in\/markets\/niftys-slide-may-continue-as-weak-earnings\/","title":{"rendered":"Nifty&#8217;s Slide May Continue as Weak Earnings and Global Risks Weigh on Markets, Warns Nuvama"},"content":{"rendered":"<h4 data-start=\"94\" data-end=\"182\">Brokerage Cuts IT Sector to \u2018Underweight\u2019, Raises Exposure to Consumer Stocks<\/h4>\n<p data-start=\"184\" data-end=\"492\">Indian equity markets continue to face significant pressure as Nuvama Institutional Equities has issued a warning that the Nifty 50&#8217;s downturn may persist. The brokerage cited weak earnings, high valuations, and rising global uncertainties as key reasons behind the market\u2019s ongoing correction.<\/p>\n<p data-start=\"494\" data-end=\"863\">The benchmark Nifty 50 index has already fallen by 15% from its recent peak, driven by weak corporate earnings and sustained foreign institutional investor (FII) selling. With no immediate catalysts for a rebound, analysts at Nuvama believe the market\u2019s recovery will largely depend on either strong earnings growth or supportive policy interventions.<\/p>\n<h3 data-start=\"865\" data-end=\"928\">Weak Earnings and Valuation Concerns Weigh on Markets<\/h3>\n<p data-start=\"930\" data-end=\"1254\">According to Nuvama, the ongoing correction is primarily due to India\u2019s weak earnings growth, which has failed to keep pace with high stock valuations. Additionally, global macroeconomic risks\u2014including concerns over a U.S. recession, high interest rates, and geopolitical tensions\u2014have further dampened sentiment.<\/p>\n<ul data-start=\"1256\" data-end=\"1684\">\n<li data-start=\"1256\" data-end=\"1415\">Corporate earnings outlook remains muted due to:\n<ul data-start=\"1315\" data-end=\"1415\">\n<li data-start=\"1315\" data-end=\"1347\">Shrinking profit margins<\/li>\n<li data-start=\"1350\" data-end=\"1378\">Weak consumer demand<\/li>\n<li data-start=\"1381\" data-end=\"1415\">Global trade uncertainties<\/li>\n<\/ul>\n<\/li>\n<li data-start=\"1416\" data-end=\"1514\">FIIs have been aggressively selling Indian equities, exacerbating the market\u2019s correction.<\/li>\n<li data-start=\"1515\" data-end=\"1684\">Valuation premium to emerging markets (EMs) has now reverted to its 10-year average, suggesting that the recent India-specific de-rating may be complete.<\/li>\n<\/ul>\n<p data-start=\"1686\" data-end=\"2070\">&#8220;Just as India\u2019s isolated cyclical melt-up in FY24, H1FY25 was a break from the past. The ongoing correction is driven by earnings reconciling with weak top-line growth and aligning with EM peers. High valuation only worsened the situation, leading to heavy FII outflows, which, in turn, has weakened India\u2019s balance of payments and macro liquidity,&#8221; Nuvama noted in its report.<\/p>\n<h3 data-start=\"2072\" data-end=\"2134\">Nuvama Adopts Defensive Stance, Downgrades IT Sector<\/h3>\n<p data-start=\"2136\" data-end=\"2291\">Given the prevailing macroeconomic conditions, Nuvama has turned defensive on Indian equities, making significant shifts in its sectoral allocations:<\/p>\n<ul data-start=\"2293\" data-end=\"2939\">\n<li data-start=\"2293\" data-end=\"2497\">IT sector cut to \u2018Underweight\u2019 from \u2018Neutral\u2019, citing risks from:\n<ul data-start=\"2369\" data-end=\"2497\">\n<li data-start=\"2369\" data-end=\"2399\">Slowing global IT spending<\/li>\n<li data-start=\"2402\" data-end=\"2453\">Rising protectionist trade policies in the U.S.<\/li>\n<li data-start=\"2456\" data-end=\"2497\">High employee costs impacting margins<\/li>\n<\/ul>\n<\/li>\n<li data-start=\"2498\" data-end=\"2604\">Increased exposure to consumer stocks, which are seen as more resilient during economic downturns.<\/li>\n<li data-start=\"2605\" data-end=\"2781\">Overweight recommendations on:\n<ul data-start=\"2646\" data-end=\"2781\">\n<li data-start=\"2646\" data-end=\"2662\">Consumer<\/li>\n<li data-start=\"2665\" data-end=\"2686\">Private banks<\/li>\n<li data-start=\"2689\" data-end=\"2706\">Insurance<\/li>\n<li data-start=\"2709\" data-end=\"2724\">Telecom<\/li>\n<li data-start=\"2727\" data-end=\"2750\">Pharmaceuticals<\/li>\n<li data-start=\"2753\" data-end=\"2781\">Cement and chemicals<\/li>\n<\/ul>\n<\/li>\n<li data-start=\"2782\" data-end=\"2939\">Underweight on:\n<ul data-start=\"2808\" data-end=\"2939\">\n<li data-start=\"2808\" data-end=\"2827\">Industrials<\/li>\n<li data-start=\"2830\" data-end=\"2844\">Metals<\/li>\n<li data-start=\"2847\" data-end=\"2860\">Power<\/li>\n<li data-start=\"2863\" data-end=\"2873\">IT<\/li>\n<li data-start=\"2876\" data-end=\"2895\">Automobiles<\/li>\n<li data-start=\"2898\" data-end=\"2939\">Public sector undertakings (PSUs)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3 data-start=\"2941\" data-end=\"3026\">Small- and Mid-Cap Stocks Remain Overvalued, Vulnerable to Further Declines<\/h3>\n<p data-start=\"3028\" data-end=\"3336\">Despite the broader market downturn, small- and mid-cap stocks remain expensive, making them particularly vulnerable to further corrections. According to data from LSEG, small-cap and mid-cap indices have already declined by 24% and 20.5%, respectively, but valuations continue to be a concern.<\/p>\n<ul data-start=\"3338\" data-end=\"3578\">\n<li data-start=\"3338\" data-end=\"3457\">Nuvama expects continued downside risk in these segments unless earnings improve or valuations correct further.<\/li>\n<li data-start=\"3458\" data-end=\"3578\">High valuations in small and mid-caps suggest they may still be overpriced compared to their earnings potential.<\/li>\n<\/ul>\n<h3 data-start=\"3580\" data-end=\"3661\">Foreign Institutional Investors (FIIs) Continue to Exit Indian Equities<\/h3>\n<p data-start=\"3663\" data-end=\"3847\">A key driver behind the market correction has been persistent FII outflows, which have put additional pressure on the rupee and weakened India&#8217;s macroeconomic liquidity position.<\/p>\n<ul data-start=\"3849\" data-end=\"4212\">\n<li data-start=\"3849\" data-end=\"4094\">FIIs have been reducing exposure to Indian equities due to:\n<ul data-start=\"3915\" data-end=\"4094\">\n<li data-start=\"3915\" data-end=\"3964\">Better opportunities in developed markets<\/li>\n<li data-start=\"3967\" data-end=\"4022\">Concerns over slowing corporate earnings growth<\/li>\n<li data-start=\"4025\" data-end=\"4094\">Geopolitical and policy uncertainties impacting Indian stocks<\/li>\n<\/ul>\n<\/li>\n<li data-start=\"4095\" data-end=\"4212\">The exodus of foreign investors has intensified, contributing to market volatility and liquidity constraints.<\/li>\n<\/ul>\n<h3 data-start=\"4214\" data-end=\"4283\">Market Recovery Hinges on Earnings Growth or Policy Support<\/h3>\n<p data-start=\"4285\" data-end=\"4540\">While valuations have now realigned with historical averages, Nuvama warns that a sustainable market recovery will require either a significant improvement in earnings growth or policy support from the government and the Reserve Bank of India (RBI).<\/p>\n<ul data-start=\"4542\" data-end=\"4858\">\n<li data-start=\"4542\" data-end=\"4694\">Corporate earnings growth remains the biggest uncertainty, with analysts closely watching Q4 FY24 and Q1 FY25 results for signs of a turnaround.<\/li>\n<li data-start=\"4695\" data-end=\"4858\">Government stimulus measures or regulatory interventions could provide short-term relief to markets, especially in sectors like infrastructure and banking.<\/li>\n<\/ul>\n<p data-start=\"4860\" data-end=\"5036\" data-is-last-node=\"\" data-is-only-node=\"\">Nuvama\u2019s cautious stance reflects broader concerns that the Indian market may struggle in the near term unless earnings surprises positively or external conditions improve.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Brokerage Cuts IT Sector to \u2018Underweight\u2019, Raises Exposure to Consumer Stocks Indian equity markets continue to face significant pressure as Nuvama Institutional Equities has issued a warning that the Nifty 50&#8217;s downturn may persist. The brokerage cited weak earnings, high valuations, and rising global uncertainties as key reasons behind the market\u2019s ongoing correction. The benchmark [&hellip;]<\/p>\n","protected":false},"author":4,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615],"tags":[],"ppma_author":[1331],"class_list":{"0":"post-5147","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-stock-market-news"}," _eael_post_view_count":0,"authors":[{"term_id":1331,"user_id":4,"is_guest":0,"slug":"sourabh","display_name":"Sourabh Sharma","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5147","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=5147"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5147\/revisions"}],"predecessor-version":[{"id":5149,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5147\/revisions\/5149"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/5148"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=5147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=5147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=5147"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=5147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}