As Indian equity markets step into the new year of 2026 following a phase of consolidation, leading brokerage firm Motilal Oswal Financial Services (MOSL) has outlined its outlook. The firm anticipates that the coming year will be characterized by a steady recovery in corporate earnings and sustainable growth, rather than speculative market rallies.
Market Outlook: A Shift from Euphoria to Fundamentals
The brokerage highlighted that the Nifty index managed to close the year 2025 with gains of approximately 10%. This performance came despite facing significant headwinds, including global trade uncertainties, persistent selling by Foreign Institutional Investors (FIIs), and a period of muted earnings growth for Indian companies.
Looking ahead, MOSL expects a notable turnaround. It projects that corporate earnings growth will rebound to 9% in the financial year 2026 (FY26). This recovery is forecasted to gain further momentum, with growth rates improving to around 15% in both FY27 and FY28. This optimistic projection is underpinned by several domestic factors, including policy stability from the government, anticipated interest rate cuts by the Reserve Bank of India (RBI), and a revival in private capital expenditure (capex).
Top Stock Recommendations for the New Year
Against this backdrop of expected earnings revival, Motilal Oswal has curated a list of ten high-conviction stock ideas for 2026. The selection is based on clear earnings visibility and comfortable valuations. Here are the brokerage's detailed picks:
Bharti Airtel: With a target price of ₹2,365, implying a 12% upside, MOSL praised the telecom giant's strong execution in mobility and digital infrastructure. Premiumisation, Average Revenue Per User (ARPU) expansion, and steady broadband growth are key drivers. The brokerage expects consolidated revenue and EBITDA to grow at a Compound Annual Growth Rate (CAGR) of 15% and 18%, respectively, from FY25 to FY28.
State Bank of India (SBI): A preferred large-cap banking stock, SBI has a target of ₹1,100 (14% upside). MOSL cited its diversified franchise, robust balance sheet, and improving asset quality. Credit growth remains healthy near 13% year-on-year. Initiatives like Project Saral and a strong corporate pipeline add comfort.
HCL Technologies: This IT major stands out with a target of ₹2,150, suggesting a significant 29% potential upside. Growth is driven by IT services and engineering R&D, with early traction in AI-led solutions (about 3% of revenue). MOSL expects a USD revenue CAGR of 5.3% over FY25–FY27.
Eternal (Zomato's parent): MOSL is bullish on Eternal with a target of ₹410 (46% upside). The shift to an inventory-led model is boosting revenue recognition and margins. The rapid scaling of Blinkit (quick-commerce) and diversification into franchise/e-commerce are key positives.
TVS Motor Company: Given a target of ₹4,159 (14% upside), TVS is noted for outperforming the auto industry. Strong festive demand, GST-led recovery, and rising market share in two-wheelers and EVs support growth. MOSL expects revenue, EBITDA, and PAT to grow at CAGRs of 21%, 25%, and 29% from FY25 to FY28.
Max Financial Services: With a target of ₹2,100 (26% upside), the company is delivering better-than-industry growth in Annual Premium Equivalent (APE). Rising contributions from protection and annuity products, along with improved persistency, are driving factors. Value of New Business (VNB) margins are expected to improve steadily.
Biocon: Following its acquisition of Viatris's biosimilar business, Biocon is poised for a biologics-led revival (Target: ₹460, 16% upside). MOSL expects a broad-based scale-up across its biologics, generics, and Contract Development and Manufacturing Organization (CDMO) segments.
JK Cement: Despite near-term pricing pressures, JK Cement shows resilience (Target: ₹7,000, 23% upside). Strong volume growth in key markets, cost control, and capacity expansions are positives. The company's push towards green energy (aiming for 75% by FY30) is expected to support margins.
Poonawalla Fincorp: This non-banking financial company (NBFC) is building a digital, multi-product lending platform (Target: ₹600, 27% upside). New engines like personal loans and gold loans are scaling fast, supporting an Assets Under Management (AUM) CAGR of about 50% from FY25 to FY28. AI investments are expected to reduce the cost-to-income ratio.
Privi Speciality Chemicals: Positioned to benefit from the global aroma chemicals market, Privi has a target of ₹3,960 (21% upside). Planned capacity expansion and a proposed merger with Privi Fine Sciences to add bio-based products are key growth levers. MOSL expects revenue and EBITDA CAGRs of 27% and 34% from FY25 to FY28.
Investment Strategy for a Steady Growth Phase
Motilal Oswal's analysis suggests that investors should prepare for a market phase where fundamentals take center stage. The emphasis is on companies with clear earnings trajectories, strong competitive positions, and reasonable valuations. The identified stocks span sectors like telecommunications, banking, information technology, consumer services, automobiles, insurance, pharmaceuticals, cement, financial services, and chemicals, offering a diversified play on India's anticipated economic growth story for 2026 and beyond.
Disclaimer: The views and recommendations presented are those of Motilal Oswal Financial Services and not of Mint. Investors are advised to consult certified experts before making any investment decisions.
