What's next for Sensex, Nifty? Stock market experts weigh in on what lies ahead for various sectors

India's broader stock market indices, which were seen regaining lost ground from April, seem to have entered a correction phase again in July. The NSE Nifty 50—after topping 25,541 points on July 1 2025—has once again declined below 25,000, touching a low of 24,918.65 level in intra-day trading on Friday, July 18. It's a similar story with the BSE Sensex, which regained the 84,000 level on June 27, but has again fallen below 82,000; it touched an intra-day low of 81,608.13 on July 18.

 

As such, since the beginning of 2025, the Nifty 50 has gained around 5.5 per cent, while the Sensex is up around 4.5 per cent only. Analysts do expect the markets to bounce back from the recent correction, but gains are likely to be limited. 

 

Analysts at PL Capital see Nifty at 26,889 by December 2025, which is about 8 per cent higher than the current level. Smallcase managers, on the other hand, see Nifty range bound between the 26,300 and 27,500 levels by the year-end.

 

"Although a broad-based recovery is yet to take hold, factors such as tax relief, normal monsoon, easing inflation, and lower interest rates are creating conditions for a consumption-driven rebound. Rural sentiment remains resilient, while urban sentiment is gradually improving, particularly in discretionary segments," said Amnish Aggarwal, director – research, institutional equities, PL Capital.

 

There are multiple factors that will need to be watched out for as we look ahead over the next few months. One major development will be how the trade tariffs pan out. US President Donald Trump's administration had paused the tariffs till July, but has in recent days announced new rates for some countries. The trade deal between the US and India is also yet to be completed, although there have been hints in recent days that it is likely soon. Businesses and investors alike will be closely watching out for how that pans out.

 

Geopolitical tensions in the Middle East, and any further escalation, will also be something global investors will be keeping a watch on. Inflation in India has been falling, and the Reserve Bank of India has reciprocated by cutting interest rates by 100 basis points. 

 

But what kind of impacts the tariffs have on US inflation and how the Federal Reserve responds in the months ahead will also affect investment flows. Another thing, and perhaps more important to watch, would be how the corporate earnings pan out.

 

Vikas Gupta, Smallcase manager and CEO of Omniscience Capital, says they are positive on banking, power, housing finance, infrastructure, construction, manufacturing and commercial services.

 

"These sectors have valuation comfort as well as growth," said Gupta. The budget increases in defence and railways are also giving him comfort, but there are valuation concerns in defence, and while Railways comparatively is better on valuation, it's not as attractive as the sectors mentioned earlier.

 

PL Capital is estimating only 2 per cent growth in sales in its coverage universe over the current financial year and next, while profit before tax is expected to grow 15.6 per cent. 

 

According to Aggarwal of PL Capital, telecom, asset management companies, cement, capital goods, and oil and gas are among the sectors that are likely to lead the growth. On the other hand, building material companies, consumer durables, travel and financial services are likely to see a decline in their profit before tax, he said.

 

"Domestic-oriented sectors will continue to outperform," said Aggarwal.

 

Manish Jain, chief strategy officer and director - capital markets at Mirae Asset Capital Markets, stresses there is still a lot of near-term uncertainty, given the tariff overhang, geopolitical tensions and corporate earnings. While long-only equity investors may like to remain invested, Jain says he would like to hold a little more cash in his portfolio. Then, in volatile markets, opportunities would emerge, and you would have the cash to buy good stocks at decent prices.

 

Beyond the near-term uncertainty, where are the opportunities that he sees in the market?

 

"Defence comes top of my mind, globally and domestically it's a theme, and despite the sharp rise in valuations, I will continue to bat on it. Look at the kind of acquisition programme that the government is running and the kind of order book they have, plus NATO's defence spending, the defence theme will continue for some time," said Jain.

 

Artificial Intelligence, digitisation, power and transmission, distribution companies, as well as alternative energy, are among the themes one would bet on over the longer 5-7 year period, he added.

 

"One needs to start thinking about how to build my portfolio around these themes," said Jain, stating that these themes will be immune to the uncertainties we are seeing currently.

 

Domestic-focused pharma companies, as well as healthcare and diagnostics, are also among the themes that could provide immunity and good returns in the medium term, he said.

 

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