‘Difficult to make case for sustained underperformance’

Indian equity markets have delivered negligible returns over the past year at the index level. Saion Mukherjee, head of India equity research at Nomura, tells Puneet Wadhwa in an email interview that while a risk-on environment may favour mid and smallcaps, a stock-specific approach is recommended. Edited excerpts:

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2025 has so far turned out to be a stock-specific market. Are there any strong triggers that could lift all boats?

recommend a stock-specific approach rather than broad exposure.

Have you tweaked your equity strategy for India?

We continue to prefer domestic over exporters and consumption over investments. Since July 2024, after India’s general elections, we have anticipated a policy shift favouring consumption. This is now reflected in the direct and indirect tax cuts announced this year.

We have remained cautious on exporters, including pharmaceuticals and information technology (IT) services. Our March 2026 Nifty target is 26,140, assuming roughly a 6 per cent risk to the current consensus estimate for 2026-27 (FY27) and a one-year forward price-to-earnings ratio of 21x.

How long will Indian equities’ underperformance continue?