Nifty reported a 4% year-on-year net profit uptick, which was slightly ahead of MOFSL’s 3% estimates. “India’s corporate earnings for the second quarter of fiscal 2025 reflected a lackluster performance,” the brokerage said, adding that this marked the second consecutive quarter of single-digit growth since the pandemic recovery began in mid-2020.
While conceding the earnings as “weak”, Kotak Institutional Equities maintained that net profits for the Nifty pack was still above its expectations. Adjusted net profits of the Nifty50 Index increased 5% YoY, which was 1.2% above its expectation of 3.7% YoY increase owing to strong numbers of SBI and higher-than-expected other income in the case of ONGC, the brokerage said.
What to buy?
Following a near 10% correction in Nifty from its peak, Motilal Oswal has made significant changes in its model portfolio where it raised the weights in BFSI, technology and healthcare with a distinct bias towards large-caps. “We are OW on IT, healthcare, BFSI, consumer discretionary, industrials, and real estate. In contrast, we are UW on metals, energy, and automobiles,” the brokerage said.Motilal’s preferred largecap ideas are HDFC Bank, Bharti Airtel, ICICI Bank, State Bank of India (SBI), HCL Technologies, Larsen & Toubro (L&T), Mahindra & Mahindra (M&M), Power Grid Corporation, Titan Company, Trent and Mankind Pharma.
It has 11 more stocks to buy, but in the small and midcap space viz. Indian Hotels Company (IHCL), Cummins India, Persistent Systems, Dixon Technologies, Godrej Properties, Coforge, Metro Brands, Global Health (Medanta), Angel One, PNB Housing Finance and Cello World.
Nuvama Institutional Equities remains overweight on consumer, private banks, insurance, telecom, IT, pharma and cement, while remaining under weight on industrials, auto, metals and PSUs.
Nuvama said in its note that earnings downgrade risks persist, though the valuations are still quite elevated and close to historical peaks, suggesting more downside ahead.
The domestic brokerage has revised its ratings upwards in 20 stocks while downgrading another dozen stocks.
Among the upgrades are UPL, Eicher Motors, Bank of Baroda (BoB), Bharat Electronics (BEL), NBCC, Dixon Technologies, Larsen & Toubro (L&T), Supreme Industries, Delhivery, Godrej Properties and Anupam Rasayan.
Among the downgrades are Indraprastha Gas (IGL), Mahanagar Gas (MGL), Bajaj Finserv, Kfin Technologies, PNC Infratech, Interglobe Aviation (Indigo), Firstsource Solutions, Blue Dart Express, Gujarat Gas, IHCL and Indiamart and JSW Steel.
Among the Nifty companies, Nuvama remains most bullish on ICICI Bank and Axis Bank and underweight on HDFC Bank and SBI. It is overweight on Bharti Airtel, HUL, Britannia Industries, ITC, Wipro, Infosys, LTIMindtree, Sun Pharma, Grasim Industries and UltraTech.
While it remains underweight on autos, M&M and Maruti Suzuki remain the preferred picks.
Kotak Institutional Equities has added Godrej Consumer Products (GCPL) after removing it three months back on future growth potential.
The brokerage has also reduced weights on Hindustan Unilever (HUL), ICICI Bank (100 bps to 9.7% and below stock threshold of 10) and removed Pidilite Industries. Kotak’s Model Portfolio consists of stocks from varied sectors like BFSI (highest weight), auto, consumer, capital goods and insurance among others.
After ICICI Bank, the next highest weight is given to HDFC Bank (8.6) followed by SBI (7) and Axis Bank (6.6). M&M is the only largecap auto stock in its model portfolio. In capital goods, it is L&T and Cummins India.
Britannia Industries, Apollo Hospitals, HUL, United Spirits and HDFC Life Insurance Company are other notable constituents.
Also Read: BFSI’s 15% YoY Q2 earnings growth outperforms Nifty, handsomely. HDFC Bank, ICICI Bank among analysts top bets
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)