Stocks To Buy: Motilal Oswal Recommends Top 16 Stocks In BFSI Sector; HDFC Bank, Nuvama Among The List

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Motilal Oswal Report

FY25 was a challenging year for the BFSI sector. Over the past 12 months (June 24-25), Bank Nifty and the Nifty Financial Index posted returns of 8.1% and 14.6%, respectively, compared with 5.4% for the Nifty-50.

Several BFSI stocks delivered healthy double-digit returns over the past 12 months, such as HDFC Bank (17%), ICICI Bank (23%), Kotak Mahindra Bank (23%), Federal Bank (17%), PNB Housing Finance (24%), HomeFirst (20%), Bajaj Finance (25%), HDFC Life (28%), BSE (187%) and Nuvama (33%).

With a cumulative 100bp reduction in the repo rate by the RBI, FY26 earnings will start on a softer note for banks; however, with a gradual repricing of deposits and benefits from the CRR cut effective Sep’25, we estimate the earnings trajectory to recover from H2 FY26 onward.

NBFCs, especially vehicle financers, will benefit from rate cuts, as lower funding costs will result in NIM expansion of 10-25 bp across lenders and help the sector pivot back to growth. Non-lending financials will continue to provide attractive investment opportunities over the year.

After the recent outperformance by the sector, we have further narrowed down our top ideas and selected 16 stocks in our Motilal Oswal's BFSI top picks 2.0 from our coverage of ~70 names.

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