The Indian stock market experienced a phase of healthy consolidation in 2025, following several years of impressive gains. Key benchmarks, the Sensex and Nifty, traded within a range for much of the year. This was influenced by global uncertainties, mixed corporate earnings, and heightened sensitivity to macroeconomic indicators.
Navigating Global Headwinds and Domestic Support
The most significant market shock came from aggressive US trade policies under the returning Trump administration, which triggered global tariff actions. This led to periods of risk-averse sentiment, erratic foreign capital flows, and increased volatility across emerging markets, including India. However, the domestic market found substantial support from strong economic policies, consistent buying by Domestic Institutional Investors (DIIs), and robust local liquidity, which helped cushion the external blows.
As the calendar turns to 2026, brokerage firm Religare Broking suggests the outlook is turning more constructive. The firm advises investors to treat market volatility as a chance to build positions in quality companies. The focus should be on firms with solid fundamentals, clean balance sheets, clear earnings visibility, and strong long-term growth drivers.
Religare Broking's Top 5 Stock Picks for Long-Term Investment
Against this backdrop, Religare has shared a list of five stocks it believes are "well-positioned to deliver robust performance in 2026". The brokerage recommends accumulating these stocks to benefit from the anticipated next phase of the market cycle. Here are the detailed picks:
1. Mahindra & Mahindra (M&M)
Target Price: ₹4,161 | Upside Potential: 15%
Religare states that M&M's medium to long-term prospects remain strong, powered by product innovation, operational efficiency, and a commanding market position. New SUV launches, improved affordability post-GST, and a diversified portfolio spanning SUVs, tractors, and light commercial vehicles should maintain healthy demand. The brokerage expects margin expansion from higher volumes and cost control, while strong cash flows will fund strategic investments in electric vehicles and technology. It initiates coverage with a 'Buy' rating.
2. Kotak Mahindra Bank
Target Price: ₹2,487 | Upside Potential: 15%
The bank is poised for steady, risk-adjusted growth, according to Religare. This is backed by its shift towards secured lending, stabilizing asset quality, and a strong retail deposit base. Margin pressures are likely to ease as the interest rate cycle matures. Its diverse subsidiaries in asset management, broking, insurance, and vehicle finance offer additional growth avenues. With valuations below long-term averages, the risk-reward is favourable. Coverage is reinitiated with a 'Buy'.
3. Lupin
Target Price: ₹2,508 | Upside Potential: 19%
The pharmaceutical major is set for growth driven by global expansion, a better product mix, and a focus on high-value therapies. Regulatory approvals in key markets like the US and Europe, along with growth in emerging markets, provide stable revenue visibility. Religare expects strong financial growth over FY25-27E and initiates coverage with a 'Buy' rating.
4. ICICI Prudential Life Insurance
Target Price: ₹800 | Upside Potential: 23%
ICICI Prudential's strategy of a protection-led product mix, multi-channel distribution growth, and operational discipline supports sustainable earnings growth. The brokerage forecasts healthy growth in Annual Premium Equivalent (APE), Value of New Business (VNB), and Profit After Tax (PAT) over FY25-27E. A stable product mix also reduces sensitivity to stock market swings. Coverage is initiated with a 'Buy'.
5. JK Lakshmi Cement
Target Price: ₹979 | Upside Potential: 23%
The cement company's strategy of measured capacity expansion, moving towards premium products, and operational discipline positions it well. Religare expects very strong revenue, EBITDA, and profit growth over FY25–27E, supported by volume growth and better realisations. EBITDA margins should expand with improved capacity utilisation and cost-saving initiatives. It starts coverage with a 'Buy' rating.
Investment Outlook and Key Takeaway
The overarching message from Religare Broking is one of cautious optimism for 2026. While acknowledging the recent consolidation and global challenges, the firm sees opportunities in select fundamentally sound companies. Investors are advised to use periods of market weakness to build positions in such stocks with a long-term horizon, focusing on business strength rather than short-term noise.
Disclaimer: This article is for educational purposes only. The views and recommendations are those of the brokerage firm and not of the publisher. Investors are strongly advised to consult with certified financial experts before making any investment decisions, as market conditions are dynamic and individual circumstances vary.
