As the market continues to experience a downturn, Motilal Oswal has identified its top stock picks to navigate the current slump. The Nifty 50 index slid 5.9% month-on-month in February 2025, marking its fifth consecutive month in the red and recording the second steepest monthly decline since March 2020.
This market correction has been driven by a slowdown in earnings growth, global economic concerns due to the tariff war, and foreign institutional investor outflows.
Motilal Oswal's top large-cap stock picks include Reliance Industries Ltd., Bharti Airtel Ltd., ICICI Bank Ltd., State Bank of India, Hindustan Unilever Ltd., Larsen & Toubro Ltd. , Sun Pharmaceutical Industries Ltd., Maruti Suzuki India Ltd., Mahindra & Mahindra Ltd., Titan Co., Trent Ltd., and LTIMindtree Ltd.
For mid-cap and small-cap stocks, the firm recommends Indian Hotels Co., Dixon Technologies Ltd., JSW Energy Ltd., BSE Ltd., Godrej Properties Ltd., Coforge Ltd., JSW Infrastructure Ltd., Page Industries Ltd., IPCA Laboratories Ltd., Metro Brands Ltd., and Angel One Ltd.
As valuations for mid- and small-caps are still expensive compared to their historical levels as well as the Nifty 50, leading to Motilal Oswal favouring large-caps in its portfolio. The brokerage said it is overweight on stocks from consumption, BFSI, IT, industrials, healthcare and real estate, and underweight on oil and gas, cement, automobiles, and metals.
Over the past 12 months, large-cap stocks have gained 1%, outperforming mid- and small-caps, which have fallen 1% and 8%, respectively. However, over the last five years, mid-caps have significantly outperformed large-caps by 87%, while small-caps have outperformed large-caps by 61%, the brokerage noted.
FII outflows have continued for the second consecutive month, with outflows of $5.4 billion in February 2025, following $8.4 billion in January 2025.
Conversely, domestic inflows remained strong at $7.4 billion in February 2025, compared to $10 billion in January 2025. Year-to-date, FII outflows into Indian equities stand at $13.8 billion, while domestic institutional investor inflows remain robust at $17.5 billion.
Among the sectors, capital goods, real estate, technology, media, and utilities were the top laggards month-on-month.
The MSCI India Index has underperformed the MSCI Emerging Markets Index over the past 12 months but has notably outperformed it over the last 10 years.
"The expectations for FY26 corporate earnings are still somewhat elevated, in our opinion, given the underlying macro-micro backdrop and are thus ripe for further downgrades. The recent correction in broader markets factors in some of the potential disappointments in earnings ahead," Motilal Oswal said.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
