Indian markets closed calendar year 2024 with gains of nearly 9%, rising for the ninth year in a row. With the the new year underway, Motilal Oswal highlighted top picks for the year ahead, benefitting from key themes it mentioned in a recent 'Bulls & Bears' note.
The brokerage recommends multiple capital market players such as BSE Ltd., and Angel One Ltd. that benefit from the increased retail participation in equity markets as the theme of financialisation of savings plays out. Other themes that finds favour with Motilal Oswal are EMS — with Dixon Technologies Ltd. and Kaynes Technology Ltd. as the preferred picks, and Indian Hotels Ltd. amid the premiumisation trend in consumption.
Motilal Oswal iterates an overweight stance on the information technology space, as well as healthcare, BFSI, consumer discretionary, industrials, and real estate. It has an underweight stance on metals, energy, and automobiles.
Among largecaps, it HDFC Bank Ltd., State Bank of India, Larsen & Toubro Ltd., HCL Tech, Mahindra & Mahindra, Zomato, Bharti Airtel, Titan Company, Mankind Pharma, and Dixon Technologies as its top picks.
It also mentioned Indian Hotels, Cummins India, Kaynes Technology, BSE, Godrej Properties, Coforge, Metro Brands, IPCA Laboratories, Angel One, and JSW Infrastructure as favourable picks in the mid and smallcap space.
Looking ahead to 2025, analysts expect a gradual recovery in corporate earnings and consumption, driven by increased government spending and improving rural incomes following a successful kharif season. However, potential volatility looms with the upcoming U.S. administration change and persistent inflation concerns that could delay expected interest rate cuts.
From a valuation perspective, the Nifty currently trades at a 12-month forward P/E of 19.9x, slightly below its long-period average of 20.5x, the brokerage highlighted. The market capitalization-to-GDP ratio stands at 138%, reflecting the robust growth in India's equity markets.
India's market capitalization surged 23.6% over the past 12 months, outperforming the global market cap increase of 10.9%. The MSCI India Index has maintained its strong performance, delivering a 14% return over the past year and outpacing the MSCI EM Index by a remarkable 168% over the past decade.
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