Stock market: InCred cuts its bull-case probability to 30%, shares investing ideas

InCred Equities in a strategy note said the flattish stock market trend in recent months and the quarter is as per its expectation, as the brokerage cuts its bull-case probability to 30 per cent from 35 per cent earlier), slashing March 2026 Nifty index target to 25,368 from 25,421 earlier. The target suggests a marginal 3 per cent upside ahead.

InCred said hostile global environment against hopes of fiscal stimulus in domestic consumption are  key themes influencing the stocks in the short term. While consolidation has eased the forward P/E to below the 10-year mean level, high volatility and short-term  economic challenges persist, as it retained “flat index return outlook.” 

“High volatility in the index, we believe, will continue due to global policy actions  and India’s relative rich valuation compared to Asia (+1SD above the 10-year  mean). Government policy action is improving consistently in CY25F, especially for reviving consumer demand i.e. income-tax rate cut, planned GST rate rehaul, fiscal discipline and policy rate cut, which are getting factored in quickly in  valuations, while the earnings benefit may be delayed and back-ended,” InCred said. 

In a bear-case scenario, InCred expects a 10.7 per cent downside from current levels and in  a bull-case scenario, it expects a 11.6 per cent upside.

For the Jun 2025 quarter, India Nifty-50 companies reported EPS growth of just 2 per cent YoY, a  beat of 2 per cent against Bloomberg (BB) consensus estimate. The prolonged slowdown in sales growth to 6 per cent was disappointing, while there was flattish Ebitda, adjusted for BFSI, commodity and telecom sectors, InCred said.

“The only double-digit Ebitda growth sectors were cement, telecom and oil & gas. The downgrade in FY26F-27F Bloomberg Nifty-50 EPS  estimates continued in the 1-3 per cent range, driven by BFSI and information technology  sectors, while the upgrade was only in telecom and industrial sectors,” InCred said. 

Comparing Bloomberg consensus FY26F EPS change against sector returns for the last six months, InCred Equities said the valuation rerating has been excessive for sectors like telecom, energy,  metals, and utilities. 

“We have upgraded Hindustan Unilever and Blue Dart Express while downgrading Bank of Baroda and Bharat Forge in recent weeks. Index consolidation to prevail; we favour large-caps,” it said.