Emkay retains Nifty 50 Dec target at 25,000 post Budget, replaces ONGC & BPCL with THESE two stocks in model portfolio | Stock Market News

Stock Market Outlook: Brokerage house Emkay Global Financial Services, in its latest India Strategy Report, projected that the Nifty index is likely to attain the 25,000 level by December 2025.

The brokerage attributed this optimism to fiscal stimulus through tax cuts in the FY26 Union Budget, which is expected to support consumption recovery in the latter half of CY25. Emkay anticipates a shift in market preferences from industrials and manufacturing to consumption, with a particular focus on Consumer Discretionary as the preferred segment.

While staples and financials stand to benefit, the brokerage noted a disconnect between growth and valuations in these sectors, leading to a rebalancing of its model portfolio by increasing exposure to Consumer Discretionary and Financials, funded by reductions in the Energy sector.

Market Outlook and Portfolio Adjustments

Emkay Global maintained its Nifty target of 25,000 for December 2025, based on a conservative 21.1x trailing P/E.

The brokerage emphasised its continued focus on consumption-driven growth and increased its overweight stance on Consumer Discretionary. According to Emkay, this sector is poised for a cyclical recovery, with valuations appearing reasonable at a forward P/E of 23x for FY26, especially compared to the more expensive Staples segment. To align with this view, the brokerage added Maruti Suzuki and Paytm to its model portfolio while removing ONGC and trimming BPCL holdings.

Among its top stock picks for 2025, Emkay Global recommended:

Large Caps: Lupin, Zomato, Tata Motors

Mid Caps: IndusInd Bank, Escorts, One97 Communications

Small Caps: StoveKraft, Metropolis Healthcare, Quess Corp

Portfolio Allocation

The brokerage increased its Consumer Discretionary allocation to 21 per cent in its model portfolio, overweighting the sector relative to the BSE-200 benchmark by 10 per cent. While acknowledging near-term positives, Emkay retained an underweight stance on staples, citing limited cyclical upside and high valuations at a forward P/E of 32.4x for FY26. Additionally, Paytm was added as a proxy consumption play, pushing the financials sector weight to 23 per cent, though the brokerage remained cautious about lending financials.

Conversely, Emkay downgraded the Energy sector to a neutral stance, citing a lack of near-term catalysts and subdued earnings potential. The brokerage noted that while oil marketing companies (OMCs) could benefit from lower crude prices in the long run, it preferred to wait for either an earnings boost or historically low valuations before increasing exposure.

Government’s Tax Reforms and Fiscal Consolidation

Emkay Global highlighted that the government’s plan to reduce income tax for individuals earning below ₹2.5 million could boost net incomes by 2-7 per cent, providing a stimulus of approximately ₹1 lakh crore, or 0.3 per cent of GDP. While this alone may not fully counteract the current consumption slowdown, the brokerage pointed to additional tailwinds such as improving employment trends and a projected rebound in retail loan growth in FY26, particularly in the unsecured segment. However, Emkay cautioned that the government’s assumption of 15 per cent YoY growth in personal income tax collections remains optimistic.

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On the fiscal front, Emkay noted the government’s commitment to fiscal consolidation, targeting a budget deficit of 4.4 per cent of GDP. However, this consolidation has come at the cost of capital expenditure, with growth slowing to 10 per cent YoY for FY26, a significant decline from the 31 per cent CAGR seen during FY21-24.

The brokerage believes that capex as a share of GDP is nearing its peak, as neither state governments nor corporates are expected to fully compensate for the central government’s reduced spending. That said, steady 10-12 per cent multi-year growth in infrastructure investments continues to provide a fundamental boost to the economy. Power and real estate emerged as key beneficiaries of the capex cycle, with Emkay identifying the government’s ₹10 lakh crore, five-year asset monetisation plan as a potential long-term catalyst, though near-term impact remains limited.

Impact of US Tariffs on Indian Markets

Emkay Global also assessed the potential impact of recent US tariffs imposed on Canada, Mexico, and China. The brokerage noted that while this development could provide a relative advantage to Indian exporters in the US market, China’s likely response with price cuts could negate any immediate benefits. Additionally, the tariffs may trigger another phase of US dollar appreciation, which could negatively impact both Indian equities and the rupee.

Emkay emphasised that while the announced tariff actions were more benign than initially feared, further downside risks could arise if the US takes direct trade actions against India, though this scenario remains unlikely at present.