Bank of America’s Amish Shah has projected a modest 12% upside for the Nifty, warning that weak capital expenditure (capex) trends and stretched market valuations will constrain broader market returns in the near term.
Weak Capex Growth a Major Drag
Shah highlighted that India’s capex cycle continues to disappoint, dampened by slow private-sector investments and delayed industrial expansion.
He added,
“Given the belief that capex growth will continue to disappoint, we are negative on anything linked to capex—steel, cement, and the industrial sector.”
Sectors directly tied to infrastructure and industrial activity may face earnings pressure as spending momentum remains sluggish.
Valuations Remain Elevated
Despite strong liquidity and steady domestic flows, market valuations are stretched, leaving limited room for re-rating. With earnings upgrades yet to materialise meaningfully, Shah believes the Nifty’s upside potential is capped.
Market Outlook
While the benchmark index could still deliver a low double-digit return, the upside is expected to be tactical rather than structural unless capex revival gains traction. Investors may need to shift focus toward consumption, financials, and structurally strong themes, as capex-heavy sectors face headwinds.
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