The stock market has been witnessing a stormy growth for the last one year. Nifty has recently shown a retracement, with a correction of more than 1200 points after setting a new all-time high level of 26277. After the correction from the high level, consolidation is taking place in Nifty. Some brokerage houses believe that there can be good growth in Nifty in the next one year.

Domestic brokerage firm Prabhudas Lilladher (PL Capital) has valued Nifty at 19.1x on the 15-year average PE and given the index a one-year target of 27,867 for the index and a bull case target of 29,260 at 20x.

The brokerage house has expressed confidence in big names like BEML Cyient and HDFC AMC among the stocks that will rise during this Nifty boom.

Prabhudas Lilladher believes that some large-cap stocks are going to perform very well during this period, among which are prominent Ambuja Cement, Bharti Airtel, Bharat Electronics, HDFC Asset Management Company, ICICI Bank, IndusInd Bank, Interglobe Aviation, Larsen & Toubro, Max Healthcare Institute, Mahindra & Mahindra, Reliance Industries, and Titan stocks.
 

Confidence was also expressed in midcap and small-cap.

Domestic brokerage firm Prabhudas Lilladher is bullish on these mid and small-cap stocks. These stocks include BEML, Crompton Greaves Consumer Electricals, Cyient, JB Chemicals & Pharmaceuticals, Jindal Stainless, Lemon Tree Hotels, RR Cable, and Safari Industries (India).

PL Capital believes that the market and Street estimates have already priced in the strong demand surge during the upcoming festival and wedding season and any disappointment in demand during this period could lead to further downgrades in EPS estimates.

PL Capital's report said, "The market has moved in favor of defensive sectors as valuations have become quite expensive in several cyclical phases despite continued growth. With high growth and low-risk expectations, sectors such as FMCG, IT services, pharma, and consumer durables have seen a strong rally. Returns between large-cap and mid-cap indices have declined significantly in the last three months."

The report said that the difference in returns between the large cap and small cap index is now less than 1% for three months, although the difference is much larger for six and twelve-month periods.

Capital goods, infrastructure, ports, EMS, hospitals, tourism, new energy, e-commerce and telecom are emerging sectors. Investors should be in these stocks if available at the right valuation.

The report also said that hospitals, pharma, capital goods, and chemicals sectors are expected to continue strong EBITDA growth. Auto, banks, and durable products are also likely to register double-digit growth. There are signs of improvement in rural demand for staples, although second-quarter results may reflect some impact from prolonged rains.

Additionally, discretionary spending remains positive in sectors such as travel, accommodation, jewelry, and two-wheelers, while passenger vehicles (PV), quick services restaurants (QSR), apparel, footwear, and building materials are still facing challenges. Sectors such as auto, capital goods, pharma, and hospitals are likely to report strong margin expansion, while building materials, consumer, media, oil & gas, and cement may see margin contraction. However, in case of an uptrend, PL Capital has said that Nifty could trade at a 10% discount to its long-term average, with a target of 25,080.