Expect Nifty to be around 25,000 by end-2025: ICICI Direct research head Pankaj Pandey

Expect Nifty to be around 25,000 by end-2025: ICICI Direct research head Pankaj Pandey

For Pankaj Pandey of ICICI Direct, sectors that could do well include banks, automobiles, capital goods, power, retail and hospitality; on the other hand, cement, metals and textiles could face near-term challenges, he says.

Pankaj Pandey, Head – Research, ICICI Direct says that they do not expect the Indian stock market to enter a bear market zone – a fall of 20 per cent from the highs – and have a one-year forward Nifty target of 18,700, which is lower than their earlier estimate of 20,000. 

Here’s his take on some of the key concerns and the way the markets will move in the near-term. 

What is your Nifty target for end-2022? 

Over a two-year horizon (FY22-24E) Nifty earnings are seen at around 14-15 per cent CAGR. Our 12 month forward Nifty target stands at 18,700 i.e. 20 times PE on FY24 estimated earnings per share (EPS). 

Was there any downward or upward revision in the Sensex/Nifty target since January this year? 

We had lowered our Nifty target by around 6.5 per cent from 20,000 to 18,700 in June 2022 as we rolled forward to FY24 and trimmed our target multiple to 20 times FY24 P/E versus 23 times FY23 P/E, amid increasing interest rate scenario. 

The Indian benchmarks are down around 10 per cent from the high it touched in October last year. They were down 18 per cent recently. Do you think Indian indices can enter a bear market with a fall of 20 per cent or more?  

We do not expect to enter bear market zone. 

Firstly, most of the negatives such as likely growth challenges in US/Eurozone, higher crude and commodity prices (partly accentuated amid Russia Ukraine feud), high inflation (possibly moving towards the peak or already peaked) are already known. 

On the other hand, domestic macros largely seem good with projected GDP growth of 7.5 per cent in FY23, strong GST and direct tax collection, inflation at around 7 per cent currently (largely seen in expanding growth regime and also owing to higher commodity prices).  

Has the Indian stock market bottomed out? If not, then if you have to put a number or a range for Sensex/Nifty bottom, then what would that be? 

We do not believe in putting in bottom led numbers amid volatility, which is nothing but a guess work.

Nonetheless, we believe volatility may remain in the near term but the recent trough gives an opportunity to the long-term investors to load up on quality companies with sustainable growth visibility.  

If you had to pinpoint 3-4 key concerns for the markets, what would those be?  

One of the biggest concerns is global growth challenges especially in US/Euro regions. Other concerns include higher crude and commodity prices (also partly accentuated amid Russia Ukraine feud) and high inflation across. 

Are we still in a long-term bull market with the ongoing downswings only technical corrections?  


FPIs have sold nearly $34 billion in nine months. Would the FPI selling continue at the same pace or do you expect some sort of reversal or reduced pace of selling?  

One key factor that we are tracking currently is crude and commodity prices. We believe that crude correction could be possible given a) lower demand amid slower economic growth in US/Euro region b) extension of covid led volatility in China (impacting demand) and c) possible war resolution. Commodity correction would temper inflation expectation, rupee pressure and FII selling, in our view. 

Domestic institutional investors and retail investors have been providing much support to the markets at a time when FPIs have been selling significantly. You expect that trend to continue or does the ongoing downswing have the potential to affect such inflows as well?  

We expect the domestic flows to remain strong. The inward domestic economy provides ample opportunities to invest. Also, equity as overall investments continue to remain low and had headroom to grow further, structurally. 
If you had to pick 3-4 sectors with a medium-term investment horizon, which would those be? Also, sectors to stay away from.  

Among sectors which could do well are banks (past peak NPA cycle, reasonable low double digit credit growth likely, attractive valuations), auto (improving CV cycle), capital goods & power (capex focus of government), retail & hospitality (full-fledged economic reopening beneficiaries after two years). 

Among sectors which have near term challenges are cement (supply glut), metals (China’s demand challenges) and textiles (headwinds such as high raw material cost, freight, inventory pile up at global retailers etc.). 

Where do you see the Sensex/Nifty by end-2025?  

Assuming a 13-14 per cent CAGR, which we believe is sustainable in a medium to long term amid growing economy and relatively strong economic setup amid global milieu of uncertainty, we see Nifty levels at 25000 by end-2025. 

Is this a good time to look for potential multibaggers in small-caps, or is it better to stay safe and go for blue chips? 

We continue to remain market cap agnostic. The emphasis should be investing in the growing businesses which are capital efficient in nature or have well defined paths to attain sustainable capital efficiency. Thus, we see pockets of value across blue chips and midcaps/smallcaps.

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