ITC among 18 large and midcap ideas from Motilal Oswal post election verdict

Sectors with over-heated valuations like industrials, PSU, defence and banking may turn attractive again from a risk-reward perspective, domestic brokerage firm Motilal Oswal said today while giving out a list of 18 large and midcap stock ideas following election results.

From the large cap category, the brokerage firm has picked stocks like ICICI Bank, ITC, HCL Tech, Coal India, L&T, M&M, Ultratech, CIFC and Hindalco.

On the other hand, Indian Hotels, Ashok Leyland, Godrej Properties, Global Health, KEI Industries, PNB Housing, Cello World and Kirloskar Oil are top picks of Motilal from the midcap category.

"With elections now behind, fundamentally, India remains in a very good shape with almost a mini-Goldilocks moment with excellent macros (GDP growth of 8.2% in FY24 on the back of ~7% growth in FY23, inflation at ~5%, both current account and fiscal deficits well within tolerance band, stable currency, etc.), solid corporate earnings (Nifty ended FY24 with 25% earnings growth and FY25/26 earnings are likely to post 14-15% CAGR) and valuations at ~20x one-year forward earnings," said Gautam Duggad, Research Analyst at Motilal Oswal.

After the initial disappointment and anxiety around government formation, we expect the focus to revert to fundamental bottom-up stock picking, added Duggad.

In the very near term, stated the Motilal Oswal report, it is expected that the market might remain obsessed with government formation exercise, with a keen eye on key cabinet portfolios such as finance, defence, roads, energy, commerce, and railways.

Despite the reduced majority, Motilal expects the policy agenda of Modi 2.0 (investment-led growth, capex, infrastructure creation, manufacturing, etc.) to continue, although with some tweaks along with some populist measures to address rural stress and lift sentiments at the margin, given the nature of the verdict.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)