Want to ride the tide? Over 40 stock ideas as Nifty bulls attempt to regain strength

With Sensex rallying 3,000 points in the previous two trading sessions amid optimism surrounding the outcome of the Maharashtra elections, there are over 40 stocks on which brokerages are betting on to capitalise on market recovery, driven by improving valuations, robust domestic flows, and hopes of capex revival.

With Nifty being down around 8% from its September-end peak, analysts at JM Financial have shortlisted 39 stocks, while Jefferies and Goldman Sachs have identified 14 and 25 stocks, respectively.

Jefferies says capitalize on cyclical downturns

Jefferies has picked 14 stocks it believes are well-positioned for a short-term bounce-back. The brokerage emphasizes sectors like defense, aviation, and FMCG, supported by resilient domestic demand and easing valuation premiums.“A pick-up in govt. spending / capex in 2H, improved seasonality and somewhat better relative (to region) valuations mean that a potential short term bounce back is possible in the market after the recent correction,” the brokerage said.

Jefferies’ top 14 picks

Hindustan Aeronautics Ltd (HAL), Indigo Airlines, Coal India, Dabur India, Godrej Consumer Products (GCPL), Punjab National Bank, Macrotech, Cholamandalam Finance, GMR Airports, Supreme, IDFC First bank, KEI Industries, Mahanagar Gas, Honasa.Also read | Emkay cuts Nifty target to 25,000 but says earnings downgrades not alarming

Goldman Sachs says pick quality over quantity

Goldman Sachs presents 25 stocks that align with its “quality growth” strategy amid a cyclical slowdown in earnings. The brokerage recommends focusing on exporters, defensives, and domestic sectors with strong balance sheets and high earnings visibility.

“Given our expectation of range-bound markets in the near-term, we think investor focus is likely to lean towards quality companies with strong earnings visibility. With a more constrained beta environment, we also remain focused on targeted alpha ideas that include our preferred medium-term themes of housing, agriculture, defense, tourism and affluent India,” the brokerage said.

Goldman Sachs’ top 25 picks

Infosys, TCS, L&T, HDFC Bank, Bharti Airtel, ITC, Mahindra & Mahindra, Kotak Mahindra Bank, Power Grid Corp. of India, Adani Ports & SEZ, Bajaj Auto, Trent Ltd, LTIMindtree, Pidilite Industries, InterGlobe Aviation, HDFC Life Insurance, Eicher Motors, Godrej Consumer Products, Shriram Finance, Torrent Pharmaceuticals, United Spirits, Havells India , Cholamandalam Investment, Apollo Hospitals Enterprise, Polycab India.

JM Financial says focus on recovery potential

JM Financial highlighted 39 stocks—14 large caps, 10 midcaps, and 15 small caps—that have seen dips from their 52-week highs. The firm underscores the potential for a turnaround driven by strong domestic SIP flows and a pickup in government spending.

The top picks of the brokerage are:

Largecaps: ONGC, Reliance Industries, Axis Bank, Bharat Electronics, Cholamandalam Investment, Samvardhana Motherson, Shriram Transport, Havells India, DLF, Maruti Suzuki, Polycab, Jindal Steel & Power, Bank of Baroda, and Hindalco Industries.

Midcaps: Supreme Industries, Oil India, KEI Industries, Suzlon Energy, BHEL, Global Health, Gujarat Gas, Metro Brands, Deepak Nitrite and Marico.

Smallcaps: Zee Entertainment, HG Infra Engineering, PCBL, Cyient DLM, Star Health and Allied Insurance, Gokaldas Exports, Lemon Tree, SAMHI Hotels, PNB Housing Finance, CMS Info Systems, Balrampur Chini, Bikaji Foods, Techno Electric, Aadhar Housing Finance, and Ahluwalia Contracts.

Also read | MSCI rejig today: Indian stocks to see $2.5 billion inflows, spotlight on HDFC Bank

The collective optimism from JM Financial, Jefferies, and Goldman Sachs reinforces the belief that the recent correction could be a springboard for long-term gains. Investors are advised to tread carefully, prioritizing fundamentally strong stocks that align with their risk profiles.

The Indian markets have seen about Rs 1.2 lakh crore in foreign institutional investor (FII) outflows from India since October until now.

“While Indian equities have seen large foreign selling over the past 2 months ($14bn foreign selling from the recent peak) and the foreign flows are unlikely to reverse meaningfully in the near-term amid a stronger-for-longer dollar environment, domestic funds have remained strong buyers of equities (net buying nearly$60 billion ytd), helped by record retail inflows via SIPs. This could limit any further large ‘price’ correction in the market,” said Goldman Sachs.

Also read | Adani Group’s debt-to-EBITDA hits 2.46x in H1 FY25, backed by Rs 53,024 crore reserves

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)