Motilal Oswal sees 4 factors boosting risk-reward

Nifty22, 780.25-360.25. Motilal Oswal Midcap Fund Direct-Growth.

Key points

• Top Trending Stocks: SBI Share Cost, Axis Bank Share Rate, HDFC Bank Share Cost, Infosys Share Rate, Wipro Share Cost, NTPC Share Rate.
• Motilal Oswal sees 4 factors boosting risk-reward after market's sharp fall from 2024 high, lists 27 stock picks.
• The Indian stock market has gone under a prolonged consolidation phase since the bull run lost steam in September 2024.
• Sensex crossed 85K for first time 2 years ago, now down 10K points from milestone.
• Most sectors are now trading significantly below their September 2024 peak valuations, the domestic brokerage highlighted.

Nifty22, 780.25-360.25. Motilal Oswal Midcap Fund Direct-Growth. The Economic Times daily newspaper is available online now.

Motilal Oswal sees 4 factors boosting risk-reward after market's sharp fall from 2024 high, lists 27 stock picks. ETMarkets.comLast Updated: Sep 28, 2026, 03: 59: 00 PM IST.

Motilal Oswal Financial Services sees improving risk-reward for Indian equities as valuations cool, earnings recover and domestic liquidity remains solid. The brokerage additionally highlights sectoral rotation and names 27 stocks throughout sizeable-, mid- and small-cap segments as top ideas.

Meanwhile, the Indian stock market has gone under a prolonged consolidation phase since the bull run lost steam in September 2024. Nevertheless, Motilal Oswal Financial Services (MOFSL) now believes that cooler valuations, improving earnings, robust domestic liquidity and resilient economic fundamentals have strengthened the risk-reward for Indian equities. In its latest India Strategy report, the domestic brokerage remarked the market has been range-bound below its peak levels, but there was significant divergence in sector and stock performance beneath the surface. Sharp sectoral rotation toward segments with a higher representation of mid and small-caps supported SMIDs outperform, cushioning the impact of a sharper drawdown in large-caps. It limited the broader weakness in Indian indices, it stated.

Sensex crossed 85K for first time 2 years ago, now down 10K points from milestone. What can trigger the next bull run? While an ongoing rotation away from established large-caps led to a significant underperformance throughout a number of traditional sectors and stocks, motilal Oswal highlights sectoral rotation Motilal Oswal continued that a number of emerging sectors, particularly in the SMID universe, delivered a solid outperformance. Live Events.

While technology (-18%), consumer (-17%), media (-15%) and real estate (-12%) were the key laggards over the past two years, according to the domestic brokerage, defence (+19%), metals (+14%) and PSU banks (+10%) remained the key outperformers. Valuations well below 2024 highs The ongoing market consolidation, along with the continued earnings recovery from FY25 lows, has led to a sustained cooldown in valuations from the highs seen in 2024, MOFSL remarked. It observed that large-caps and mid-caps saw the steepest valuation corrections of 29% and 27% from their highs, respectively, whereas small-caps corrected 4% from the peak on a 12-month forward P/E basis. Most sectors are now trading significantly below their September 2024 peak valuations, the domestic brokerage highlighted. FII outflows vs DII inflows The past two years have witnessed record FII outflows and DII inflows. Solid retail participation, backed by steadily rising monthly SIP contributions of over Rs 300 billion a month, provided a cushion against the relentless FII selling, Motilal Oswal noted. Surprisingly, the sharp FII outflows of $56 billion over the past 24 months effectively offset the cumulative FII inflows of the previous eight years, leading to near-nil cumulative FII investment previously decade, it observed. In contrast, DIIs pumped in a record $177 billion in Indian equities over the past 24 months, 23% higher than the cumulative DII inflows over the preceding eight years, the domestic brokerage highlighted. IPO boom on Dalal Street Meanwhile, India's primary market has been buoyant previously two years despite a largely flat secondary market, reflecting sustained investor appetite for new equity issuance and solid participation from institutional and retail investors. "The vibrant primary market has absorbed a meaningful share of available liquidity, diverting some flows away from the secondary market and contributing to its subdued performance against the backdrop of a prolonged phase of consolidation. This divergence underscores the resilience of India's equity ecosystem, where solid capital formation and fundraising activity have continued even as listed equities have remained range-bound, " MOFSL stated. As broad-based inflationary pressure has yet to emerge, the domestic brokerage additionally feels that the ongoing global rate-hike cycle is anticipated to remain shallow in India. Will RBI announce steep rate hikes? Nomura sees up to 50 bps growth by Dec, dismisses 125 bps hike fears Strength beneath the surface Despite ongoing geopolitical headwinds, oil rate volatility and bouts of macro uncertainty, India's economy and corporates have demonstrated resilience during the extreme volatility seen previously two years, Motilal Oswal noted. The 7.8% GDP print in Q1 FY27, robust GST collections, healthy credit expansion, robust auto volumes, and the steady recovery in corporate earnings from the FY25 lows indicate underlying economic strength. A favourable policy environment, active RBI liquidity management, steady DII flows and an estimated 16% PAT CAGR for both MOFSL Universe and Nifty over FY26-28 provide further backing, it went on. "While a consistent rise in global yields could still trigger volatility and FII outflows, the relatively contained domestic rate cycle, solid liquidity and improving earnings provide buffers against a sharp rate-driven derating in Indian equities. Yet, the underlying strength remains largely underrepresented in the collective returns, " the domestic brokerage remarked. With valuations now significantly below their peaks, earnings expansion remaining healthy, and the macro environment staying robust, Motilal Oswal Financial Services believes risk-reward has enhanced further for Indian equities. Nevertheless, given the relatively higher earnings expansion in the mid- and small-cap segments, market performance is projected to remain firmly bottom-up, it went on. Motilal Oswal's top stock picks Motilal Oswal Financial Services named Bharti Airtel, ICICI Bank, SBI, Titan, Adani Enterprises, M&M, Bharat Electronics, Zomato and Blinkit-parent Eternal, Hindalco Industries, Shriram Finance, IndiGo-parent Interglobe Aviation and Apollo Hospitals as its top Nifty 50 ideas. Among its top stock ideas outside Nifty 50 are TVS Motor Firm, BSE, SBI Funds Management, GE Vernova T&D, Lenskart Solutions, Indian Hotels, Meesho, Dixon Tech, Coforge, Radico Khaitan, Kirloskar Oil Engines, RBL Bank, Physicswallah and Inventurus Knowledge Solutions. Why is market falling today? Sensex tumbles over 1, 000 points, Nifty below 22, 850. 6 key factors behind Rs 6 lakh crore rout Disclaimer: This article has been written by Debaroti Adhikary. This person is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her 'relative(s)' (as defined under Section 2(77) of the Firms Act, 2013) do not hold any financial interest in the businesses mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/documented with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and create their investment decisions based on their own assessment. Brokerage disclaimers here.

Sbimotilal oswal financial servicesMotilal Oswal stock picksMotilal Oswal top stock picksIndian stock marketIndian equitiesMOFSL stock recommendationsNifty 50 stocksmidcap stockssmallcap stocks.

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