Domestic brokerage PL Capital has trimmed its targets for Nifty50 index, while making some key rejigs in its model portfolio, which includes select high conviction picks across various sectors.

It has removed select growth, export and crude-related stocks, with remaining positive on consumption, consumer spending and staples.

Nifty50 index has experienced a 3.8 per cent decline year-to-date, driven by sluggish domestic demand, reduced earnings per share (EPS) expectations, and significant foreign institutional investor (FII) selling. These elements have compounded the challenges faced by the Indian market, amid ongoing global tariff conflicts. PL Capital attributes this decline to reciprocal tariff measures primarily by the United States, aimed at revitalising domestic manufacturing.

The ongoing US-China tariff war remains a critical strategic issue that is unlikely to be resolved soon. This standoff is expected to affect global supply chains, trimming off 0.5 per cent from global GDP growth in the first half of 2026, and increasing volatility in commodity and currency markets. "Prolonged tariff wars could impact IT services and negate benefits from lower crude prices," said PL Capital.

Domestically, the Reserve Bank of India's recent 50 basis points rate cuts have not yet translated into increased consumer spending, despite a significant drop in food inflation. The central bank has also reduced GDP growth estimates for FY26 by 20 basis points. "The outlook remains hazy with global cues influencing domestic demand," said PL Capital.

PL Capital projects domestic sectors including hospitals, pharmaceuticals, retail, select staples, banks, defence, and power to perform well in the near term. "These sectors are expected to outperform as global uncertainties persist," said PL Capital. It forecasted Nifty's EPS to be 6.2 per cent lower for FY26 and 5.6 per cent for FY27.

The brokerage firm forecast sees Nifty50 valued at a 7.5 per cent discount to its 15-year average price-to-earnings ratio, setting a March 2027 EPS target of 1460 and a 12-month target of 25,521. In a bull case scenario, Nifty50 could reach 27,590, but a bear scenario might see it dip to 24,831, reflecting market volatility, it said.

Market dynamics show mixed demand, with rural areas displaying positivity while urban demand remains sluggish. Sectors like telecom, asset management companies (AMCs), travel, electronics manufacturing services (EMS), metals, hospitals, pharmaceuticals, and durables are poised to lead profit before tax (PBT) growth, while banks, building materials, logistics, and oil and gas face declines.

Commodities are expected to remain volatile, impacting metals and oil and gas sectors. "Bank credit growth and net interest margins face pressure, with further rate cuts likely impacting margins," said PL Capital. The report underscores cautious optimism for specific domestic sectors amid external economic pressures.

"We are removing Infosys, Reliance Industries, Larsen & Toubro, Polycab India and Doms Industries from the conviction picks. This stems from near term growth challenges and emerging market context around global tariff wars, uncertainty in crude prices and limited scope of re-rating. We add ITC, IRCTC, KEI, Triveni Turbine and Eris Lifesciences in conviction picks," PL capital added.