According to Nuvama Institutional Equities, the brokerage has identified 12 banking stocks as top picks for long-term investment amid macroeconomic challenges. The recommendations include ICICI Bank with a target price of ₹1,800 and 30% upside potential from its previous close of ₹1,387.60, HDFC Bank at ₹1,025 target (28% upside) from ₹798.90, and SBI at ₹1,250 target (21% upside) from ₹1,036.10. Other notable picks include Axis Bank (₹1,650 target, 22% upside), Indian Bank (₹1,025 target, 26% upside), RBL Bank (₹470 target, 29% upside) and City Union Bank (₹250 target, 24% upside). The brokerage emphasizes that banks are better positioned to capitalize on regulatory tailwinds while navigating macroeconomic uncertainties.
According to reports from The Financial Express, Nuvama has implemented a significant strategic shift in its model portfolio, moving from an offensive to defensive stance on Indian equities. The brokerage now favors consumer, IT, private banks, pharma, cement and chemicals while maintaining an underweight position on industrials, metals, autos and power. This repositioning reflects Nuvama's assessment that the market's next challenge will come from weakening demand rather than supply-side shocks, with the risk to earnings moving from supply to demand side. The brokerage noted that India Inc. saw a rebound in top-line growth in the second half of FY26, helped by GST cuts, RBI easing, a weak rupee and the AI-linked commodity cycle, but added that the quality of that recovery was not strong enough to justify current FY27 expectations.
As per Nuvama Institutional Equities, the financial sector appears at a crossroads amid macroeconomic headwinds from the West Asia conflict and prospects of a poor monsoon, but regulatory tailwinds can support growth and earnings resilience. The brokerage prefers private banks (PVBs) over public sector banks (PSBs), believing they are better positioned to capitalize on regulatory tailwinds and endure ECL transition, delivering superior RoAs. Large private banks are well-positioned for turnaround over FY27–29E, driven by above-system credit growth leading to gradual market share gains from PSBs and healthy RoAs in the range of 1.8–2.1%. Recent FCNR(B) and Emergency Credit Line Guarantee Scheme (ECLGS) measures will provide counter-cyclical support to growth, margins and asset quality of the sector. Public sector banks have outperformed due to market share gains and healthy capital buffers, though ECL impact and elevated G-Sec yields could stall their rally.
As reported by The Financial Express, Nuvama's large-cap basket includes ICICI Bank Ltd., Sun Pharma, Nestle India, Shriram Finance, Grasim Industries, Eicher Motors, InterGlobe Aviation, Pidilite Industries and Tech Mahindra. The brokerage argues that these companies can hold up better if demand softens, with ICICI Bank being one of the key large-cap positions. The portfolio also features Shriram Finance and Max Financial Services among preferred financial names, with the brokerage noting that private banks are trading at bottom-cycle valuations even as liquidity conditions begin to improve. The mid- and small-cap side adds Havells India, Coromandel International, Max Financial Services, Page Industries, Balkrishna Industries, JK Cement, Container Corporation, PG Electroplast, Aarti Industries and Gravita India to the model portfolio.
As reported by The Financial Express, Nuvama has assigned the cement basket a 5.3% portfolio weight against a 2.3% weight in the Nifty, implying a 300 basis point overweight. Within this sector, Grasim Industries carries a 3.1% portfolio weight versus a 1.1% Nifty weight, while Ambuja Cements has a 1.2% portfolio weight against a zero Nifty weight and JK Cement has a 1% portfolio weight against a zero Nifty weight. The brokerage is also overweight chemicals, arguing that a more competitive rupee relative to the Chinese yuan, easing cost pressure and potential for operating leverage improve the sector setup. Coromandel International and Aarti Industries are among preferred chemical names, while Navin Fluorine also appears in the broader model portfolio. The cement industry's microstructure is improving as companies move away from chasing volumes and focus more on profitability, with cement capex growth having slowed after several years of heavy expansion.
According to The Financial Express, Nuvama cited several factors supporting its defensive stance, including fading tax-cut benefits, weak income growth, slowing capex and El Niño risks that could weigh on earnings. The brokerage noted that household incomes remain weak, wage growth is subdued and rural demand could come under pressure if El Niño disrupts the monsoon. Corporate capex is also losing momentum as cash flows weaken and working-capital pressure rises, while government finances remain stretched by softer tax revenues and a higher subsidy burden. Nuvama expects the headline index could stay range-bound, with earnings downgrades continuing and stock selection doing more heavy lifting than broad market exposure. The brokerage is similarly cautious on metals, saying valuations are close to past peak levels even though return ratios are much lower than in earlier cycles, while autos are underweight because Nuvama expects the recent boost from GST cuts to fade.
