Expert view: Indian stock market may give modest returns over the next 12-15 months, says Shrikant Chouhan of Kotak

Expert view: Shrikant Chouhan, the head of equity research at Kotak Securities, believes that the Indian stock market may yield modest returns over the next 12-15 months, with earnings growth being partly offset by lower multiples. In an interview with Mint, Chouhan also shared his expectations for the Q2 earnings and his top Diwali picks. Here are the edited excerpts of the interview:

What is your assessment of market performance in Samvat 2081? What is your outlook for Samvat 2082?

Indian markets have been lacklustre in Samvat 2081, underperforming several global peers.

This is primarily attributed to earnings weakness and tariff uncertainty, which are compounded by a series of geopolitical and macroeconomic headwinds.

The Nifty touched a low of 21,750 in March 2025, while the BSE Sensex touched a low of 71,500, with both benchmark indices losing around 4.3 per cent each during Samvat 2081.

The Nifty Midcap and Smallcap indices underperformed, losing nearly 6.3 per cent and 8.5 per cent, respectively.

For Samvat 2082, we anticipate some stability in earnings following large downgrades over the past 12-15 months, and strong earnings growth in FY27 (18 per cent for the Nifty 50 index).

The market may offer modest returns over the next 12-15 months, with earnings growth being partly offset by lower multiples.

What are your top Samvat picks?

We have five "buy" recommendations and two "add" recommendations for Samvat 2082.

1. Adani Port and SEZ | Buy | Target price: ₹1,900

We anticipate strong volume growth in two-thirds of ADSEZ’s port portfolio. We estimate a ₹11,400 crore topline and ₹2,800 crore EBITDA in FY29.

2. Acutaas Chemical | Buy | Target price: ₹1,780

We expect sharp margin expansion owing to process improvements and a favourable mix. The company is well-positioned to deliver strong margin expansion for the second consecutive year.

3. Eternal | Buy | Target price: ₹375

We believe Blinkit’s take rate has room for expansion. We expect Blinkit to achieve EBITDA breakeven in H2FY26. We expect it to deliver a CAGR consolidated revenue of 83 per cent over FY25-28E.

4. ICICI Bank | Buy | Target price: ₹1,700

The return on equity (RoE) of 18 per cent is among the best in the industry. Asset quality metrics revealed no signs of stress in the unsecured loan portfolio.

5. Mahindra & Mahindra | Buy | Target price: ₹4,000

We expect the tractor segment’s volume growth momentum to continue. We expect demand momentum in the LCV segment to pick up, and anticipate profitability improvements in both the LCV and tractor segments.

6. Reliance Industries | Add | Target price: ₹1,555

RIL targets to double EBITDA between FY22 and FY27E. The telecom business IPO is expected by H1CY26.

7. Cummins India | Add | Target price: ₹4,400

We expect Cummins India to be well-positioned to sustain and grow its current margin profile of 20% or more. We assume 14-15 per cent CAGR in revenue, EBITDA and PAT over FY26-28.

What are your expectations for the Q2 earnings season?

We expect Q2FY26 net profits of the BSE-30 Index to increase 7.9 per cent year-on-year (YoY) and of the Nifty 50 Index to increase 5.4 per cent YoY.

Q2 numbers would be led by (1) automobile and components (low-to-high single-digit YoY increase in volumes due to early festive season and positive retail momentum, owing to GST cuts and lower retail prices, partly offset by higher discounts across most segments), (2) diversified financials (high single/low double digits increase in overall disbursements for most companies and reduction in funding cost), (3) IT services (steady margins led by rupee depreciation, combined with cost-control measures), (4) metals and mining (strong quarter for base metal players due to higher commodity prices in Q2FY26) and (5) oil, gas and consumable fuels sectors.

On the other hand, (1) banks (subdued loan growth, NIM compression), (2) consumer staples (no uptick in demand ahead of the festive season, although GST rate cut-triggered short-term impact on volumes and margins), and (3) real estate sectors will report a YoY decline in the net income.

What sectors can lead the next bull run?

Banks, diversified financials, and auto are the few sectors that may lead the next bull run.

What should be the equity investment strategy of retail investors?

Investors should continue to buy stocks with strong management, robust balance sheets, sound corporate governance, and steady earnings growth.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.