Indian Stocks To Turn Progressively Better In 2025, Says Motilal Oswal; ICICI Bank, SBI Among Top Picks
The global interest rates are expected to cool down and retail participation as well as institutional flows will continue to remain strong, Motilal Oswal said.
The medium-term opportunities remain intact for the Indian stock market driven by the resumption of capital spending and healthy corporate earnings, according to Motilal Oswal.
The brokerage expects a range-bound market in the first half of 2025 until earnings catch up with the rich broader market valuations, it said in a note. Motilal Oswal remains optimistic about India's growth story in the medium to long run despite the near-term challenges.
ICICI Bank Ltd., State Bank of India, Larsen & Toubro Ltd., HCL Technologies Ltd., Mahindra and Mahindra Ltd., Trent Ltd., Bharti Airtel Ltd., Titan Co., Sun Pharmaceutical Industries Ltd. and Dixon Technologies Ltd. are among the top large-cap picks for Motilal Oswal in 2025.
In the midcaps and small-cap space, Indian Hotels Co, Cummins India Ltd., BSE Ltd., Godrej Properties Ltd., Coforge Ltd., Metro Brands Ltd., IPCA Labs Ltd., Angel One Ltd., Anant Raj Ltd. and JSW Infrastructure Ltd. are the top picks.
The earnings trajectory for the third quarter will be similar to the previous one, Motilal Oswal said. The brokerage expects its coverage universe and Nifty 50 earnings to grow 6% year-on-year each in the third quarter.
For the current financial year, the brokerage expects earnings to normalise and track the revenue trend. "We anticipate the coverage universe to deliver 6% revenue growth and profit to grow 4% year-on-year. The Nifty-50 is also likely to deliver 4% earnings growth in fiscal 2025 over a high base of fiscal 2024."
Motilal Oswal is overweight on banking, financial services, and insurance, IT, industrials, healthcare, and real estate. The brokerage is underweight on oil and gas, cement, automobiles, and metals. "We have also made several additions from a bottom-up viewpoint across sectors."
With broader markets trading at significant premiums versus Nifty, Motilal Oswal remains biased towards large-caps with a 76% allocation, while mid-caps and small-caps occupy the rest.
The global interest rates are expected to cool down and retail participation as well as institutional flows will continue to remain strong going forward, the note said. "However, the extent of interest rate cuts, geopolitical uncertainties, and recovery in domestic earnings would be the key monitorables that would drive FII flows into the Indian markets."
