Earnings rebound, US tariff resolution key for Nifty to hit 30,000 by next Diwali: Motilal Oswal's Nandish Shah

Nandish Shah, AVP – PCG Research & Advisory (Fundamental), Wealth Management, Motilal Oswal Financial Services Ltd (MOFSL), believes benchmark Nifty's march toward the 30,000 mark by next Diwali will depend largely on earnings recovery and a favourable resolution of tariff issues with the Unites States. In an interaction with Business Today, Shah shared his outlook on key market drivers, sectoral trends, investment strategies, top stock picks and the risks investors should watch out for.

Here are the edited excerpts from the interview:

1) What factors do you see as most crucial in determining whether Nifty can reach 30,000 by next Diwali?

Recovery in earnings growth and resolution of tariff issues with the United States will be the most critical factors in determining whether Nifty can reach 30,000 by next Diwali. At MOFSL, we expect Nifty EPS of Rs 1,096 for FY26, representing an 8 per cent growth over FY25, and Rs 1,274 for FY27, reflecting a 16 per cent growth compared to FY26E.

2) Which sectors or stocks are likely to drive Nifty’s performance in the next 6–12 months, and why?

A domestic-focused theme is expected to lead market performance under current conditions. Sectors such as Banking, NBFC, Insurance, Auto, and Discretionary Consumption are likely to drive growth. Banking and financial services earnings are expected to recover in 2HFY26, supported by rate cuts and higher credit growth. Our preferred stocks in these sectors include ICICI Bank, HDFC Bank, SBI, HDFC Life Insurance, Max Life Insurance, L&T Finance, Aditya Birla Capital, and Shriram Finance.

Auto and auto ancillary stocks are poised to benefit from a normal monsoon and a potential cut in GST rates. We favour Maruti Suzuki, Hyundai, M&M, Hero MotoCorp, and TVS Motor. In the Consumer Discretionary segment, rising income levels and aspirational spending should support outperformance over staples. Travel and hospitality may emerge as major beneficiaries. Our preferred names in this space are Radico Khaitan, Lemon Tree, Indian Hotels, Eternal and Swiggy.

3) Based on your Diwali market outlook, what investment approach would you suggest for conservative and aggressive investors?

We recommend a conservative approach, as earnings growth is expected to remain in the mid-to-high single digits for FY26. Investors should accumulate quality large-cap and mid-cap stocks in a staggered manner, as the risk-reward profile has turned favourable. However, ongoing geopolitical uncertainty may continue to impact market sentiment.

The Nifty Midcap-100 and Nifty Smallcap-100 indices are trading at 26.4x and 24.7x, which are premiums of approximately 13 per cent and 48 per cent to their respective long-term averages. Meanwhile, the Nifty-50’s one-year forward P/E stands at 21x, nearly in line with its long-term average of 20.7x.

4) Which stocks could deliver 25–30% upside over the next year, and what supports this view?

Swiggy Ltd – LTP: Rs 435.35 | Target: Rs 560 | Upside: 28.63%

Swiggy is benefitting from easing competition in quick commerce, improved cost discipline and reduced discounting intensity. Unit economics are improving, supporting faster Instamart profitability. We expect food delivery growth to accelerate, aided by a GST-led boost to disposable income and rising discretionary spending. We forecast 23% GMV CAGR over FY26–28 and upgrade Swiggy to 'BUY' with a target of Rs 560.

UltraTech Cement Ltd – LTP: Rs 12,275 | Target: Rs 15,200 | Upside: 23.83%

UltraTech Cement continues to expand its southern footprint through organic and inorganic routes. The company is on track to achieve its 200mtpa domestic capacity target ahead of schedule, with further expansion likely. We project a capacity CAGR of 6 per cent over FY25–28 and volume CAGR of 12 per cent, with market share expected to rise to ~32 per cent by FY28.

ACME Solar Holdings Ltd – LTP: Rs 284.30 | Target: Rs 370 | Upside: 30.14%

ACME Solar reported 68 per cent YoY EBITDA growth in Q1 FY26, driven by capacity additions and higher utilization. The company aims to reach 7GW capacity by FY27, implying a 68 per cent EBITDA CAGR over FY25–27E. Early commissioning of its battery energy storage system (BESS) could enhance margins and boost FY27 earnings.

Dixon Technologies (India) Ltd – LTP: Rs 17,456 | Target: Rs 22,300 | Upside: 27.75%

Dixon posted robust growth in Q1 FY26, led by strong mobile segment performance. Backward integration through JVs and expansion in exports are driving profitability. The company targets 60–65 million smartphone units by FY27, with expected revenue/EBITDA/PAT CAGR of 33 per cent/36 per cent/45 per cent over FY25–28.

VA Tech Wabag Ltd – LTP: Rs 1,425 | Target: Rs 1,900 | Upside: 33.33%

With a strong order book and healthy bid pipeline, VA Tech Wabag is well-positioned for 15–20 per cent revenue CAGR over the next 3–4 years. Large desalination and industrial projects are expected to support margins and profitability. We forecast FY25–28 CAGR of 17 per cent/22 per cent/23 per cent in revenue/EBITDA/PAT and maintain a 'BUY' rating.

Max Healthcare Institute Ltd – LTP: Rs 1,155.50 | Target: Rs 1,450 | Upside: 25.49%

Max Healthcare continues to deliver steady growth with consistent margins. Expansion through new hospitals in Mohali, Lucknow, Saket, and Gurgaon supports sustained growth. We expect 21 per cent/22 per cent/26 per cent revenue/EBITDA/PAT CAGR over FY25–27, driven by brownfield expansion and operating leverage.

Kirloskar Oil Engines Ltd – LTP: Rs 892 | Target: Rs 1,230 | Upside: 37.89%

Kirloskar Oil Engines reported strong Q1 FY26 results, with higher demand in the power generation segment and expanding exports. The company's focus on high-margin products and diversification supports long-term growth. Trading at a discount to peers, we reiterate a 'BUY' rating with an attractive upside potential.

5) What are the key risks that could prevent Nifty from reaching 30,000, and how should investors hedge against them?

The key risks include lower-than-expected earnings growth, lack of resolution on US tariffs, and escalation of geopolitical tensions. To hedge against these risks, investors should consider higher allocations to commodities and precious metals as a defensive measure.