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Motilal Oswal Report
Indian stock markets corrected ~8% from the top over Sep-November 2024, due to a variety of factors, viz. earnings moderation and elevated valuations in midcaps and small caps, along with global factors, such as a fragile geopolitical backdrop in the Middle East and a strengthening dollar index following the Trump victory.
FIIs sold equities worth ~$13 billion in Oct-Nov'24. The correction has cooled off the valuations in large caps, even as mid/ small caps trade at expensive multiples. Nifty-50 is now trading at 19.5 times FY26E EPS, while mid-cap/small-cap indices are trading at 30x/24x one-year forward P/E multiples, off from the Sep'24 highs but still rich versus their own history as well as relative to Nifty-50.
Our model portfolio reflects our conviction in domestic structural as well as cyclical themes.
We are overweight on IT, healthcare, BFSI, consumer discretionary, industrials, and real estate. We are underweight on metals, energy, and automobiles.
Top ideas: Largecaps –
ICICI Bank, Bharti Airtel, SBI, HCL Technologies, L&T, M&M, Power Grid, Titan, Trent, and Mankind Pharma;
Midcaps and Smallcaps – Indian Hotels, Cummins India, Persistent Systems, Dixon Tech, Godrej Properties, Coforge, Metro Brands, Global Health, Angel One, PNB Housing, and Cello World.
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