Amid the ongoing market correction, Incred Equities has identified largecap stocks as attractive investment opportunities, selecting Tata Consultancy Services (TCS), Adani Ports, Bajaj Finance, HDFC Bank, Hero MotoCorp, Maruti Suzuki, and State Bank of India (SBI) as top picks. The brokerage firm believes that an improvement in real earnings yield will provide support to largecap stocks, helping them withstand further declines. According to Incred Equities, real earnings yield has entered positive territory for the first time since the Covid-19 pandemic, thus limiting the downside risks for these stocks.
As market volatility continues, the brokerage noted that the ongoing correction since mid-September 2024 has brought down the valuation of the Nifty50 index to below the 10-year mean level of 20 times one-year forward price-to-earnings (P/E) ratio, nearing the -1 standard deviation level. This correction has opened up opportunities for long-term investors to accumulate quality stocks at relatively lower valuations.
Incred Equities assigned an “Add” rating to Tata Consultancy Services with a target price of ₹4,915, Adani Ports at ₹1,500, Bajaj Finance at ₹9,750, HDFC Bank at ₹2,150, Hero MotoCorp at ₹5,525, Maruti Suzuki at ₹14,261, and SBI at ₹1,000. These stocks, according to the brokerage, are well-positioned to benefit from an improving macroeconomic environment and a gradual recovery in corporate earnings.
On the other hand, the brokerage remains bearish on Tata Steel, assigning it a “Reduce” rating with a price target of ₹82. SBI Cards also received a “Reduce” rating with a target price of ₹550, while InterGlobe Aviation and Clean Science and Technology were downgraded with price targets of ₹3,030 and ₹683, respectively. The cautious stance on these stocks reflects concerns about sector-specific headwinds and broader market conditions that could impact their near-term performance.
In terms of overall market movement, Incred Equities has revised its near-term outlook, lowering the probability of its bull-case scenario for the Nifty50 in FY26F to 5%, down from 10% earlier. At the same time, the brokerage raised the probability of a bear-case scenario to 45%, up from 40%. Taking into account the Bloomberg consensus earnings per share (EPS) estimate for the Nifty50, the brokerage has marginally reduced its blended index target to 22,850 by the end of March 2026, reflecting a modest upside of 2% from current levels. In a bear-case scenario, it expects an 8% downside from present levels.
The broader market has witnessed significant losses in recent months, with both the Sensex and Nifty showing negative returns on a year-to-date basis. The Sensex has declined by 4.48% so far this year, while the Nifty has lost 4.55%. Over the past three months, the decline has been even steeper, with both benchmark indices slipping 7% each during this period.
Despite the correction, market experts believe that selective stock opportunities have emerged for investors. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted that the sharp correction in the broader market has made valuations in certain segments attractive. In particular, he pointed out that defence stocks, which had experienced a rapid surge in valuations, have now corrected significantly, offering long-term investors a better entry point.
According to Vijayakumar, a sustained rally in the market will depend on clear signs of recovery in economic growth and corporate earnings. In the near term, he advises investors to focus on specific stocks rather than broader market trends, as stock-specific action is expected to dominate despite headwinds such as selling pressure from foreign institutional investors (FIIs) and concerns related to Trump tariffs.
As markets navigate through ongoing uncertainties, Incred Equities’ latest recommendations suggest that largecap stocks continue to offer stability and growth potential. Investors will likely keep a close watch on macroeconomic indicators, corporate earnings, and global developments to assess the direction of the market in the coming months.
