Indian equities are receiving bullish upgrades from both international and local brokerages, forecasting robust gains in leading large-cap shares. After months of net outflows, November saw foreign investors return as buyers, lifting market confidence significantly.
Asset managers are boosting investments in healthcare, financial services, and specialty chemicals, while reducing exposure to commodity chemical producers and sectors sensitive to crude oil prices. The robust beginning of Samvat 2083 in the stock market has redirected focus to areas of strength within the domestic equity environment.
Brokerages’ Diverse Bets
Investment firms and asset managers have diversified their bets across various sectors, focusing on stocks that have seen significant declines due to high inflation, oil prices, and foreign fund outflows. Strong performance by domestic companies in the September quarter, coupled with the global shift away from artificial intelligence investments, has signaled a potential rally in Samvat 2083.
Foreign investors have bought equities worth ₹663.02 billion in November, according to NSDL data, marking a sharp reversal from October and September, when they withdrew ₹348.43 billion and ₹358.61 billion, respectively.
Global brokerage Citi Research has raised its target on the benchmark Nifty 50 index to 28000 points by 2027-end, primarily due to strong earnings growth, lower oil prices, and expectations of a slowdown in AI investments. An increase of around 100 basis points in India‘s active weight will likely drive around $12 billion of inflows, Citi said.
Top Picks and Sector Trends
HSBC has upgraded Indian equities to overweight from neutral, citing robust domestic credit growth and stable earnings. The firm highlighted that Indian stocks offer better diversification and lower volatility compared to Asian peers, which are heavily exposed to AI stock corrections.
Domestic investment firms also see a buying opportunity as several large-cap stocks trade below their long-term averages. While some analysts attribute low valuations to slower earnings growth, others argue that domestic earnings, though modest, have been more consistent than those in other emerging markets.
Sonam Srivastava, Chief Executive Officer of Wright Research, said, “Healthcare has become the biggest piece in our portfolios, and financials, especially private and public banks, are right up there too.”
Divam Sharma, CEO of Green Portfolio, highlighted a growing interest in specialty chemicals, particularly fluorochemicals and contract manufacturing, driven by supply chain disruptions and import substitution due to the war in West Asia.
Analysts predict strong performance from upstream oil and gas, banking, telecom, capital goods, and pharmaceutical sectors. Conversely, aviation, FMCG, cement, tyre, and rate-sensitive consumer discretionary sectors are expected to face margin pressures.
Upstream oil companies like ONGC and Oil India face earnings downgrade risks as crude oil prices drop below $90 per barrel. The Nifty has risen 9% in November amid falling oil prices, but it remains uncertain if this optimism is justified.
Earnings growth in the IT sector has slowed to around 2–3%, from 4–5% in recent years, partly because of AI-led deflationary pressure, HSBC said. Even in case of a recovery in the next financial year, IT services’ growth is expected to remain in the mid-single digits, with 2–3% growth expected for the sector.
Institutional analysts are betting on structural growth drivers and cyclical recoveries to propel market performance. Motilal Oswal picked Kotak Mahindra Bank with a target of ₹500, while ICICI Securities picked the lender with an ₹540 target.
Top Picks and Targets
Motilal Oswal also picked Adani Ports with an ₹2,130 target based on robust cash balances. ICICI Securities issued an ₹2,210 target focusing on its logistics park integration. In consumer and retail segments, Motilal Oswal picked Eternal with a target of ₹420 driven by aggressive store expansion.
Axis Securities picked Eternal with a target of ₹365, citing a surge in net order value during the September quarter. Motilal Oswal picked Titan with a target of ₹6,000, pointing to its extensive network of stores and strong jewellery sourcing capabilities.
SBI Securities picked Tata Steel with a target price of ₹200, highlighting the ramp-up of the Kalinganagar facility and anticipated sales-volume growth. HDFC Securities picked the steel major with a target of ₹210. PL Capital picked Shriram Finance with a target of ₹1,200, anticipating an 18% compound annual growth rate in assets under management.
In the defence sector, PL Capital picked Bharat Electronics with a target of ₹490 backed by a massive order book, while HDFC Securities set a target of ₹475 on the stock. Bharat Electronics has a ₹687.2 billion order book, supporting its growth prospects.
