The Indian equity benchmark, the Nifty 50, has extended its losing streak to three consecutive sessions, dragged down by a combination of foreign capital outflows, caution ahead of the Q3 earnings season, and prevailing geopolitical uncertainties. This slump has pulled the index below the 26,150 mark.
On January 7, the Nifty closed at 26,140.75, registering a decline of 0.14%. Cumulatively, over the three-day period, the index has shed 0.71% of its value. A significant factor behind this weakness is the continued selling by Foreign Institutional Investors (FIIs). In the cash segment for January so far, FIIs have offloaded Indian equities worth a substantial ₹4,650 crore.
The prevailing market sentiment appears fragile, with even large-cap stocks boasting healthy fundamentals facing selling pressure. However, market experts advise long-term investors against panicking during this sombre phase. Instead, they recommend viewing this correction as a strategic window to accumulate or initiate positions in high-quality stocks for the long haul.
Expert's Top Picks for Long-Term Portfolios
Rahul Ghose, Founder and CEO of Octanom Tech and Hedged.in, suggests that patient investors can look at building positions in five specific stocks. His analysis focuses on their fundamental strengths and long-term growth trajectories, rather than short-term market noise.
HDFC Bank: A Core Compounder at Reasonable Valuation
Ghose emphasizes that HDFC Bank continues to be the bellwether of India's private banking sector. It has a proven track record of superior asset quality, granular retail liabilities, and consistent earnings growth. Post its landmark merger, the bank has maintained healthy profitability with a return on equity in the mid-teens and a strong capital position.
Following post-consolidation volatility, the stock has de-rated and now trades at around 2.8–3 times book value and a price-earnings ratio in the low 20s. This represents a discount to its historical average. Ghose expects earnings compounding and valuation repair over a 3–5 year period as integration synergies materialize and loan growth accelerates.
"We have a 3–5 year target price of ₹1,500–1,600," said Ghose, assuming mid-teens loan growth, stable asset quality, and a price-to-book multiple of 3–3.2 times.
ITC: Navigating Near-Term Pain for Long-Term Gain
ITC's stock has faced sharp near-term pressure, hitting fresh 52-week lows after the latest excise duty hike on cigarettes. The immediate market concern revolves around the impact on volumes and margins, leading to earnings downgrades.
Ghose acknowledges that short-term volatility may persist. However, he argues that the long-term investment case for ITC rests on three pillars: its cash-generative cigarettes business, a steadily scaling FMCG portfolio with improving margins, and ongoing value-unlocking in segments like hotels through demerger/listing.
"We have a 3–5 year target price of ₹450–475," Ghose stated, based on ITC's ability to gradually pass on the tax hike, stabilize volumes, and improve FMCG profitability.
Infosys: Quality IT Services at a Reasonable Price
Infosys remains one of India's most trusted IT services firms with a strong global client base and consistent cash flow generation. After a sector-wide de-rating, the stock trades at a discount to its assessed intrinsic value while offering mid-teens RoE and high cash payouts.
As of early January 2026, Ghose notes the stock trades around ₹1,630–1,650 against an intrinsic value estimate near ₹1,900–1,950. An earnings revival driven by cost-optimization, cloud, and AI projects is anticipated from FY26 onwards.
"We have a 3–5 year target of ₹2,250–2,350," he said, expecting high single to low double-digit earnings growth and a modest re-rating.
Asian Paints: A Durable Franchise at Fair Value
Asian Paints dominates India's decorative paints market with an unparalleled brand and distribution network. It consistently generates high return on capital (ROCE above 25%). While not cheap on traditional metrics—trading at a P/E in the mid-60s—this is supported by strong profitability.
Recent slower growth has led to some valuation compression, bringing the price closer to its fair value. Ghose sees a target of ₹3,600–3,800 over 3-5 years, assuming a gradual demand improvement and high single to low double-digit earnings growth.
State Bank of India (SBI): Scale and Visibility at a Discount
SBI combines the scale of a dominant public-sector lender with a steadily improving franchise across retail, corporate, and digital banking. It has shown significant improvement in asset quality and profitability, with RoE moving into the mid-teens.
The stock trades at a discount to top private banks on price-to-book multiples. Ghose sees a potential upside of 50–70% if credit growth sustains, asset quality remains benign, and the valuation multiple inches closer to its high-quality private peers.
Disclaimer: This article is for educational purposes only. The views and recommendations are those of the expert. Investors are advised to consult certified experts before making any investment decisions, as market conditions can change rapidly.
