Nomura’s India Equity Strategy Analyzed

Nomura, a financial firm, recently suggested how to invest in India. They think people should focus on companies that make things that Indians buy, like food and medicine. They also believe some tech companies are good investments, but they’re cautious about certain other industries. Their plan includes a target for the stock market to increase by a small amount in the future, and they’ve made some changes to which companies they like most.

Key Points

• Nomura predicts a 4% rise in the Nifty stock market by 2026.
• They favor companies selling goods and services to Indian consumers.
• Pharmaceuticals and a few tech firms are seen as promising investments.
• They’re wary of industries like Capital Goods and Metals currently.
• Domestic investment is strong, but foreign investors are hesitant.
• A higher risk level could still cause problems for the market.

Nomura’s target is for the main stock market index, called Nifty, to reach 26,140 by March 2026. This means the stock market could go up by about 4%. They arrived at this number by looking at how much money companies are expected to make in the future (Earnings Per Share). They predict this will happen even though the stock market has been a bit slow compared to other markets around the world over the past year.

To find the best companies to invest in, Nomura has made some changes to their list. They added companies like Prestige Estates Projects, Swiggy (a food delivery service), and Titan (a jewelry company). They also moved away from investing in Jindal Steel and other companies they didn’t think were as good at the time.

When it comes to materials, Nomura thinks cement is a better bet than metals right now. This is because metal companies have been struggling lately. They have added Ambuja Cements to their list, but removed Jindal Steel.

Nomura is also taking a more positive view of the pharmaceutical industry. They used to be careful about it, but now they think it’s a good place to invest, especially by adding Alkem Laboratories to their favored stocks. However, they haven’t changed their minds about the companies they *don’t* like investing in.

The analysts at Nomura are focusing on companies that benefit from the Indian economy. They really like sectors like Financials (banks and insurance), Consumption (things people buy when they have money), Autos (cars and motorcycles), Cement, Pharmaceuticals, EMS (electronics manufacturing services), Real Estate, Telecom, and Power. They are more cautious about industries like Capital Goods (machines), Infrastructure (roads and bridges), IT Services (computer support), Healthcare Services, and Metals.

Even though the Indian stock market has grown quite a bit over the last five years (growing at 12.4% per year), it hasn’t done as well as other markets recently. This is because the stock market valuations were very high, and the profits companies were making slowed down.

Nomura thinks things will improve a little bit in the next year (Fiscal Year 2027), but the government’s recent efforts to encourage spending might only help some people temporarily. This is because many people don’t have much money to spend, and jobs aren’t growing fast enough.

The stock market is still attracting investments because a lot of money is coming from within India, and the risk level (how much the stock market could fall) is currently low. However, this level isn’t high enough to attract big investments from overseas investors.

A big worry for Nomura is that the risk level could increase in 2025. They were concerned about this happening, but it hasn’t yet. It’s still a possible risk to watch out for.

“The risk premium could still be a challenge for the Indian market in the future.”