Bajaj Life CIO Srinivas Rao Ravuri forecasts mid-teens earnings growth for Nifty 50 in FY27 and FY28

Nifty 50 companies will likely achieve mid-teens earnings growth across the financial years 27 and 28, according to Srinivas Rao Ravuri, who serves as the Chief Investment Officer at Bajaj Life Insurance. In an interview, Ravuri pointed out that Nifty 50 firms posted only mid-single-digit earnings growth during financial years 25 and 26, which made it hard for the market to maintain its earlier valuations.

Market Factors

Several factors caused pressure on the market recently, including persistent selling by foreign portfolio investors who hold large stakes in these companies. Market concerns also grew because some index businesses might lose out as global artificial intelligence adoption increases. However, long-term structural drivers for India remain solid, supported by a young population, a large domestic consumption market, rising incomes, urbanisation, and ongoing infrastructure spending. Near-term risks still exist, such as high crude oil prices that can push up inflation and hurt growth since India imports most of its energy needs. Geopolitical shifts also create market volatility, though India continues to navigate these challenges.

Investment Outlook

Following two years of time correction, market valuations have dropped to more reasonable levels compared to their long-term averages. Bajaj Life favors large-cap stocks right now because they trade below historical average valuations while earnings prospects improve. Small and mid-cap stocks carry higher risks because their valuations sit above historical averages and hold premiums near multi-year highs. On the fixed-income side, yields might stay high or rise further based on macro trends, leading the firm to keep portfolio duration low.

Context

Institutional investors like life insurance companies manage predictable liabilities and sticky assets, giving them a longer investment horizon than regular retail investors. This stable capital base allows them to look past short-term market turbulence and focus on multi-year earnings recovery.