Nifty Target for December 2025: Jefferies 2025 India Outlook Says Nifty Will Touch... - Excerpts

Jefferies' India Outlook forecasts the Nifty index touching 26,600 by December 2025, translating to a 10% total return.

‘Our Dec-25 Nifty target of 26,600 implies 10% total return. OWT banks, telcos, two-wheelers, healthcare, real estate, IT & power,’ the report reads.

With India's investment cycle entering its fifth year, private corporate capex and housing continue to drive growth, even as government spending moderates.

The report emphasizes that the uptick in private investments, led by sectors like electrification, power, and building materials, is key to sustaining a 6.5%-7% GDP growth rate in 2025.

While the Indian economy has experienced a slowdown due to disruptive rainfall, election impacts, and reduced credit growth, Jefferies anticipates a revival by the first half of 2025.

Improved government spending and liquidity conditions are expected to boost corporate earnings, with a projected EPS growth of 13% for FY26.

Sectoral Winners: Banking, Housing, and IT
Jefferies’ strategic overweight on banks reflects its confidence in sectors benefiting from gradual economic recovery and steady demand for financial services.

Top stock picks include ICICI Bank, Axis, SBI, Bharti Airtel, JSW Energy, TVS, Coal, Godrej Properties, Sun Pharma.

‘The valuations for Nifty, at 20.5x one-year forward PE, are ~6% above the past five-year average, and we expect market returns at 10% over CY25 in line with earnings growth. Rate cuts by the RBI (~50bps) are likely, as inflation cools off in the next few months. Given the cautious market outlook, we prefer large caps over smid-caps. Overweight Banks remains our highest-conviction idea as growth gradually picks up. Our top picks are ICICI, Axis, SBI, Bharti Airtel, JSW Energy, TVS, Coal, Godrej Properties, Sun Pharma,’ the report reads

The housing sector also stands out, with inventories at 14-year lows and prices rising consistently, pointing to sustained demand in 2025.

The IT sector is likely to benefit from global economic recovery and stable margins. Jefferies notes that any rupee depreciation due to mild current account deficits would further boost the sector.

Infosys and TCS remain among their favoured picks.

Also Read: Stock Market LIVE: Nifty Closed Below 24,700, Sensex Falls 385 Points | Republic Business

Domestic Flows and Rising Equity Supply
India's domestic equity flows are robust, annualizing at $100 billion in 2024, rivalling developed market levels. However, the supply of equities—via IPOs and private equity exits—has surged to record levels of $60 billion, matching domestic demand. 

Investment Themes for 2025
Private Capex Boom: Private corporations are driving investments, supported by bank credit approvals that have risen 60% YoY in FY24. The housing sector's pre-sales and rising construction activities will also fuel growth.
Sectoral Outlook: Jefferies remains overweight on healthcare, real estate, telecom, and power utilities. Sun Pharma, Godrej Properties, and Bharti Airtel are among its top picks.
RBI Rate Cuts: Anticipated rate cuts by the Reserve Bank of India (~50 basis points) in 2025, as inflation cools, are expected to support demand across sectors.

Challenges Ahead
Despite optimistic projections, Jefferies flags certain risks. Equity supply could outpace demand if market conditions are correct. Additionally, global uncertainties, including shifts in US monetary policy, could impact foreign portfolio inflows, which remain subdued.