OmniScience Capital Predicts Nifty to Reach 31,000 by FY27, Citing Earnings Growth as Key Driver

Market Outlook Optimistic Despite Current Valuations

A recent forecast by OmniScience Capital suggests that the Nifty 50 could reach 28,000 to 31,000 by March 2027, driven by steady earnings growth and a possible valuation re-rating. The market is considered "significantly undervalued" despite trading near long-term averages.

The forecast is based on fundamentals, with estimated FY27 earnings per share ranging from Rs 1,280 to 1,320, and the index trading at 22 to 24 times forward earnings. This implies a 15 to 25% upside over the next year, which is broadly in line with historical return bands. However, the driver mix is different, with returns likely to be rewarding for long-term investors who can tolerate volatility.

OmniScience Capital places current valuations in a middle zone, with a price-to-earnings (P/E) ratio of around 20x and a price-to-book ratio of 3x. This is close to long-term averages but below previous cycle peaks. The firm's analysis suggests that while valuation still matters, its impact fades over time, with earnings compounding dominating returns over five-year periods.

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The firm builds in a potential upside kicker from macro variables, including easing geopolitical tensions, softer crude prices, a stronger rupee, and moderating inflation. These could allow the RBI to hold rates and revive foreign inflows, triggering a re-rating of the market.

However, the re-rating argument remains contingent and not structural, treated as an upside scenario rather than a base case. Sectorally, the positioning is more decisive, with banks and the power sector emerging as high-conviction bets.

Banks are seen as the strongest structural play, backed by decade-best balance sheets, including gross NPAs below 2.5%, capital adequacy around 17%, and provision coverage nearing 77%. This leaves room for nearly Rs 94 lakh crore in incremental credit without equity dilution, positioning lenders to ride the ongoing capex cycle.

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The power sector is flagged as another long-duration opportunity, with a projected ₹65–70 trillion investment pipeline driven by renewables, storage, and green hydrogen. Rising electricity demand, including from EVs and data centres, adds visibility to the growth trajectory.

In contrast, the firm has turned cautious on the IT sector, citing uncertainty around AI-led disruption and global tech spending. While valuations have corrected, it may be prudent to wait for clearer demand trends and more attractive entry points. This marks a broader shift in market leadership, from export-driven sectors to domestic cyclicals tied to capex and infrastructure.