India's equity market may be entering a more favourable phase as earnings resilience, a revival in capital expenditure and moderating valuations improve the risk-reward for long-term investors. According to Union Asset Management Company's Sanjay Bembalkar, the time correction and earnings uptick have pushed the Nifty into the 'very attractive' zone from a fair-value perspective. He believes the next leg of market returns is more likely to come from earnings delivery rather than further valuation expansion, as uncertainty around global economic systems continues to cloud investor minds.
India's June-quarter earnings season has delivered impressive results, prompting brokerages to shift focus from index volatility to individual stock selection. According to reports from The Economic Times, the market is now pivoting towards an earnings-led cycle with emphasis on quality companies. Motilal Oswal reported that the first quarter corporate earnings season ended on a strong note, with 19 sectors beating expectations. The brokerage noted that earnings growth was led by financials, metals, oil and gas excluding oil marketing companies, automobiles, chemicals, textiles and real estate, while oil marketing companies were the main drag. The Nifty50 led a 17% YoY growth in PAT, much above the 10% estimated, with 33 Nifty50 constituents surpassing estimates against 17 misses. As per Geojit Investments's Vinod Nair, mid-caps have provided a PAT growth of 15-20% while small caps are at plus 30%, indicating broad-based growth across market segments.
Multiple brokerages have identified 50 prime stock options covering diverse industries including banking, automotive, and defense. According to The Economic Times, Motilal Oswal's preferred Nifty 50 ideas include Bharti Airtel, ICICI Bank, SBI, Titan Company, Mahindra and Mahindra, Bharat Electronics, Eternal, Hindalco, Shriram Finance, InterGlobe Aviation and Apollo Hospitals. Axis Securities has recommended Navin Fluorine with a target price of ₹8,600, VA Tech Wabag with ₹2,105, and Jubilant Ingrevia with ₹835. In banking, Axis has buy calls on Kotak Mahindra Bank with ₹500 target and ICICI Bank with ₹1,700 target.
Leading brokerages including Jefferies, Macquarie, JM Financial, JP Morgan, Morgan Stanley, and Motilal Oswal have issued compelling recommendations for 10 key stocks with significant upside potential. Patanjali Foods emerges as a standout with Jefferies projecting a 60% upside to ₹560 target price, while Motilal Oswal maintains its 'Buy' rating on ICICI Prudential AMC with 23% upside potential to ₹3,800. Jefferies has 'Buy' ratings on Emmvee Photovoltaic Power (38% upside to ₹440) and TVS Motor Company (24% upside to ₹5,425). Macquarie sees 20% upside in Divi's Laboratories to ₹10,200 target, expecting 23% revenue and 33% EPS CAGR between FY26-28.
The market's cautious stance stems from concerns about rising energy prices that could impact Q2-Q3 performance. As per Geojit Investments's analysis, the sharp rise in energy prices remains the biggest challenge, which can drag Q2-Q3 performance despite Q1's strong results. The end of the temporary U.S.-Iran ceasefire and absence of a lasting diplomatic solution have kept crude oil prices elevated, creating headwinds for an economy heavily dependent on energy imports. However, there are positive developments including the resurgence of investor interest in the IT sector after significant corrections earlier this year, with valuations becoming more attractive as sector multiples moderated below historical averages. Management commentary across major IT companies points to healthy deal pipelines and growing opportunities linked to artificial intelligence, potentially creating a new growth cycle.
