The Indian stock market has been riding a wave of optimism and caution in equal measure. The Nifty 50, India’s most tracked equity benchmark, is trading near 24,900–25,000 levels. This places it around 5 to 6 percent below its all-time intraday high of 26,277, recorded in late September 2024. Investors and analysts are debating whether earnings growth and domestic demand can push the index to reclaim and even surpass this peak by the end of 2025.
Corporate earnings in India have slowed considerably over the past year. For the April–June quarter of FY2026, Nifty 50 companies reported earnings growth of only 3 percent, compared to earlier forecasts of around 11 percent. Overall, earnings rose just 7.5 percent in this period, making it the fifth quarter in a row of modest single-digit growth. This is a big contrast from the 15 to 25 percent growth rates that had been recorded in earlier phases of the post-pandemic recovery.
Several factors have contributed to this slowdown. Global trade tensions, particularly the rise in U.S. tariffs on certain Indian exports, have weighed on sentiment. Demand in segments such as automobiles, consumer durables, and capital goods has weakened. Analysts also note that corporate forecasts are being revised downward at an accelerated pace. In just two weeks of August, earnings expectations for large- and mid-cap companies fell by 1.2 percent. This adjustment reflects the cautious mood prevailing across industries.
However, the picture is not entirely gloomy. Market strategists believe that earnings are set to rebound from the second quarter of FY2026. Julius Baer India projects that Nifty 50 companies could deliver earnings per share growth of around 10 percent for the full year. Similarly, WisdomTree research estimates that earnings growth for FY2026 could reach 14.7 percent, supported by both stronger domestic demand and stabilization in global markets. If these forecasts materialize, corporate profits will again become a strong engine driving the equity market higher.
India’s economy is powered by domestic consumption, which accounts for nearly 70 percent of GDP. This makes internal demand one of the most important levers for market growth. The government is aware of this and has recently announced a major fiscal measure to strengthen demand. On Independence Day, a wide set of Goods and Services Tax (GST) reductions were unveiled. These cuts are expected to release Rs 2.4 lakh crore into the economy. Economists estimate that the move could lift India’s GDP growth by 50 to 70 basis points.
There is some debate about how households and businesses will respond to the GST savings. While some analysts believe that most of the money will go directly into consumption, others suggest that it could also flow into savings or capital expenditure. Regardless of the distribution, the effect is expected to boost overall economic activity and create a more positive backdrop for equities.
Alongside this, rural demand is showing signs of revival after being weak for nearly two years due to inflationary pressures and uneven monsoon patterns. Fiscal support, easing oil prices, and lower inflation have created conditions for rural incomes to improve. UBS and other global investment houses highlight consumption recovery, fiscal stimulus, and rural growth as major factors likely to support Indian equities through the coming quarters.
From a technical perspective, the Nifty 50 has been holding strong support near the 24,700 level. Analysts point out that if the index breaks above 25,150, it could open the path to the 25,300–25,500 range. In recent trading sessions, broader indices showed resilience as Reliance Industries, IT majors, and banking stocks lifted the market. Nifty even briefly touched 27,900 in a rally supported by strong foreign inflows and global cues.
Despite these positive signs, risks remain. Foreign institutional investors recently turned sellers, booking profits and reducing exposure amid global uncertainty. The U.S. tariffs set to come into force on August 27 are another concern. These could impact India’s exports, corporate profits, and investor mood. Economists also warn that, while volatility has eased with the India VIX cooling down, aggressive buying in the market could be premature in the short run.
Market watchers are paying attention to late August as a period of potential inflection. Important global events, including central bank meetings and tariff deadlines, are likely to shape investor flows. Traders are cautious, keeping a close eye on whether the Nifty can sustain momentum beyond its resistance levels.
The forecasts for the Nifty’s year-end levels remain divided. A recent Reuters poll projected only modest gains of about 3.9 percent by December 2025. This would place the index around 25,834, short of its record high. According to this view, new highs may only be reached in 2026 as earnings recovery takes firmer shape.
On the other hand, a separate Reuters survey earlier in the year estimated that the Nifty 50 could climb to 26,500 by the end of 2025, eventually touching 28,450 by the end of 2026. The difference in these forecasts reflects the uncertainty surrounding corporate performance and global developments. Analysts caution that valuations in the Indian market are already elevated compared to historical averages. This means that strong earnings growth is essential to justify higher index levels.
The road ahead for the Nifty is a balance between risks and opportunities. On the positive side, domestic demand is strengthening, aided by government policy, rural revival, and easing commodity prices. Corporate earnings, while weak at present, are expected to recover gradually over the next few quarters. Technical support for the index remains firm, suggesting resilience against short-term shocks.
On the risk side, foreign investor outflows, U.S. trade measures, and global uncertainty are significant threats. High valuations also make the market vulnerable to any earnings disappointment. Even with GST cuts and fiscal measures, the actual impact on consumer behavior and corporate revenues will take time to unfold.
By combining these factors, a broad picture emerges. The conservative outlook suggests that the Nifty 50 will rise modestly to around 25,800–26,000 by December 2025. This would mean the index ends the year just shy of reclaiming its record peak of 26,277. The more optimistic forecasts see a possibility of touching 26,500, provided earnings growth rebounds more strongly than expected and domestic consumption accelerates rapidly.
Breaking decisively above the previous highs within this calendar year appears challenging but not impossible. Achieving it would require corporate profits to deliver double-digit growth from the second quarter onward and for demand revival to translate into strong quarterly sales. If these align, investor sentiment could push the Nifty beyond 26,277 by year-end.
A surge toward 28,000 is more likely to be a 2026 story, as it requires not just recovery but sustained expansion in earnings and continued policy support. For now, the market is likely to remain in a zone of cautious optimism, waiting for hard data on corporate performance and consumer spending trends.
The possibility of the Nifty 50 reaching new highs by the end of 2025 depends on two crucial drivers: corporate earnings and domestic demand. Current earnings growth is subdued but is forecast to improve steadily in the coming quarters. Domestic consumption, aided by government tax cuts and rural revival, is expected to provide a strong foundation for growth. Technical indicators also show resilience, though risks from global trade tensions and foreign investor behavior remain high.
Overall, the balance of probabilities points toward a modest rise in the Nifty by year-end, with the index potentially coming close to but not far beyond its earlier record. The real breakout toward significantly higher levels is likely to unfold in 2026, when the earnings cycle is expected to be stronger and demand conditions more firmly established.