MOSL predicts rebound in Indian stock market soon

The Indian stock market has recently experienced a decline, with a 16% drop since September 2024, raising concerns about its stability. However, brokerage firm Motilal Oswal Financial Services (MOSL) believes this decline may be nearing its end. They cite improving valuations, fiscal support, and strong growth prospects as reasons for potential rebound. On March 19, the Nifty 50 index saw gains for the third consecutive day. Despite the recent struggles, MOSL points out that the current decline aligns with historical trends, which often see similar corrections. They suggest that recent market conditions have made large-cap stocks more attractive, as the Nifty 50 trades at a roughly 10% discount compared to its long-term average. Foreign Institutional Investor (FII) sell-offs have been significant, but MOSL notes that domestic inflows from Indian Institutional Investors (DIIs) have helped stabilize the market. They predict better corporate earnings for FY26, with expected growth of around 16%, making large-cap stocks more appealing. Historically, large-cap companies tend to perform better during times of uncertainty. MOSL recommends focusing investment on large-cap stocks, particularly in the Banking, Financial Services, and Insurance (BFSI), IT, and Healthcare sectors, due to their steady growth potential. They express concerns about the technology sector, which is facing challenges such as weak spending and geopolitical tensions. As a result, large-cap IT firms Infosys and Wipro have been downgraded, while Tech Mahindra has been upgraded due to promising business performance. In the automotive sector, MOSL highlights Tata Motors for its strong focus on electric vehicles and luxury branding. The healthcare sector is showing resilience, especially with companies like IPCA and JB Chemicals gaining traction. Meanwhile, private life insurers such as HDFC Life and SBI Life are seen as strong options despite challenges facing the sector. Top stock picks from MOSL include Reliance Industries, Bharti Airtel, and Maruti Suzuki among large-caps, and HDFC AMC and Coforge among mid-tier firms. Investors are advised to seek professional guidance when making investment decisions.