While the Nifty 50 trades at stretched valuations and risks of global growth slowdown, due to trade war triggered by US President Donald Trump’s tariff policies, persist, top brokerage firm Motilal Oswal Financial Services remains positive about the Indian stock market, with stock opportunities available across largecap, midcap and smallcap segments.
Given the current volatility, the brokerage firm has a clear bias towards largecaps and domestic plays.
For example, Reliance Industries, Bharti Airtel, ICICI Bank, Indian Hotels, HDFC AMC and BSE are among the stocks in Motilal’s model portfolio.
Among the sectors, the brokerage firm is overweight on BFSI, consumer discretionary, industrials, healthcare, IT, and telecom, while it is underweight on oil and gas, cement, automobiles, real estate, and metals.
Top largecap stocks to buy
Reliance Industries, Bharti Airtel, ICICI Bank, L&T, Kotak Mahindra Bank, Titan, Mahindra & Mahindra, Trent, and Tech Mahindra are the top picks of Motilal Oswal from the largecap segment.
Indian Hotels, HDFC AMC, BSE, Suzlon Energy, Dixon Tech, SRF, Jindal Stainless, Coforge, Page Industries, Kaynes Tech, and LT Foods are the top picks of Motilal Oswal from the mid and smallcap segments.
Indian stock market: Impressive resilience, but valuations on the higher side
The brokerage firm pointed out the resilience of the Indian economy amid geopolitical tensions and slowing global growth.
“India’s nominal GDP grew 9.8 per cent in FY25, surpassing market expectations, and is projected to accelerate further to 10.8 per cent in FY26,” said Motilal Oswal.
“Although corporate profit growth moderated in FY25 due to a high base set in FY24, a slowdown in government spending during the first half of the financial year 2025 (H1FY25) amid elections, weak consumption, and volatile exports led by global uncertainties, we expect a gradual recovery ahead,” the brokerage firm said.
The Indian stock market rebounded in March after a record five consecutive months of losses. The Nifty 50 has been in the green monthly since March.
The smallcap segment has underperformed the mid and largecaps over the last year. As the brokerage firm pointed out over the last 12 months, largecaps and midcaps have gained 6 per cent and 7 per cent, respectively, outperforming smallcaps, which have risen 4 per cent.
According to Motilal Oswal, during the last five years, midcaps (CAGR: 32.4 per cent) have significantly outperformed largecaps (CAGR: 19.9 per cent) by 158 per cent, while smallcaps (CAGR: 32.8 per cent) have markedly outperformed largecaps by 165 per cent.
On the earnings front, corporate profit-to-GDP stood at a 17-year high in FY25, the brokerage firm underscored.
“In 2025, the corporate profit-to-GDP ratio for the Nifty-500 Universe remained at 4.7 per cent, marking a 17-year high. Notably, for listed India Inc., the ratio stood at 5.1 per cent, at a 14-year high,” said Motilal Oswal.
However, stretched valuation of the market has emerged as a key concern.
Motilal pointed out that the Nifty 50 has gained nearly 8 per cent this year so far and with this rally, the index trades at 22.5 times FY26E earnings, near its long-period average of 20.7 times.
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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
