Amid a shifting market landscape, Motilal Oswal has highlighted key stock ideas across large-cap, mid-cap, and small-cap segments, emphasizing value opportunities and growth potential. The brokerage notes that while India has underperformed emerging markets (EMs) in the last 12 months, it remains a long-term outperformer over the past decade.
Over the last year, the MSCI India Index has underperformed MSCI EM by 8%, but over the past decade, it has outperformed by 124%. India’s market cap-to-GDP ratio stands at 120%, moderating from 132% in FY24 but still above the long-term average of 85%. The Nifty 50 is trading at a 12-month forward P/E of 18.6x, lower than its long-period average (LPA) of 20.5x, indicating some valuation correction.
Nifty 50 earnings growth stood at +5% YoY in Q3FY25 and +4% YoY in 9MFY25, below the 20%+ CAGR seen during FY20-24. FY26 earnings growth expectation remains elevated at 15%, requiring broad-based earnings improvement to sustain valuations.
Motilal Oswal highlights several stocks trading at a discount to their historical averages, presenting potential value opportunities. Coal India, Dr. Reddy’s Labs, Apollo Hospitals, Maruti Suzuki, and ONGC are trading at lower valuations, while Bharat Electronics, Grasim, Power Grid, HCL Tech, and Tech Mahindra are at a premium.
The brokerage’s top large-cap picks include Reliance Industries, Bharti Airtel, ICICI Bank, SBI, HUL, L&T, Sun Pharma, Maruti Suzuki, M&M, Titan, Trent, and LTIMindtree. Meanwhile, in the mid-cap and small-cap segment, the preferred stocks are Indian Hotels, Dixon Technologies, JSW Energy, BSE, Godrej Properties, Coforge, JSW Infra, Page Industries, IPCA Labs, Metro Brands, and Angel One.
While India has seen short-term underperformance, its long-term growth story remains intact. With Nifty’s P/E moderating, Motilal Oswal believes certain large-cap and mid-cap stocks offer compelling value propositions. Investors should focus on quality names with earnings visibility and reasonable valuations to navigate potential market volatility ahead.
