Largecap stocks such as Tata Consultancy Services, Adani Ports, Bajaj Finance, HDFC Bank, Hero MotoCorp, Maruti Suzuki, State Bank of India (SBI) have emerged as top stock picks of Incred Equities amid the ongoing market correction. It expects an improvement in real earnings yield to support large-cap stocks. Real earnings yield improved to the positive territory for the first time since the Covid-19 pandemic, thus limiting the downside, said the brokerage.
Commenting on the market carnage, the brokerage said the ongoing correction from the mid-Sep 2024 peak has brought down Nifty50 index's valuation to below the 10-year mean level of 20x one-year forward P/E & inch towards -1SD.
It assigned add rating to Tata Consultancy Services (Target price: Rs 4,915) , Adani Ports (Target price: Rs 1,500), Bajaj Finance (Target price: Rs 9750), HDFC Bank (Target price: Rs 2150), Hero MotoCorp (Target price: Rs 5525), Maruti Suzuki (Target price: Rs 14,261), HDFC Bank (Target price: Rs 2150) and State Bank of India (Target price: Rs 1000).
On the other hand, the brokerage is bearish on Tata Steel with a reduce call and price target of Rs 82. SBI Cards too received a reduce rating with a price target of Rs 550.
InterGlobe Aviation and Clean Science and Technology were also assigned Reduce calls with price targets of Rs 3030 and Rs 683 , respectively.
On the index movement in the near term, the brokerage pared its bullish projections. It cut FY26F bull-case probability to 5% (from 10% earlier) and raised bear-case probability to 45% (from 40%).
"Building in Nifty-50 Bloomberg consensus EPS cut, we have reduced our blended Nity-50 target marginally to 22,850, an upside of 2%, by the end of Mar 2026F. In a bear-case scenario, we maintain an 8% downside from current levels," said Incred Equities.
On a year-to-date basis, Sensex is down 4.48% and Nifty has lost 4.55%. In the last three months, losses have been bigger.
The 30 stock and the 50 stock benchmark indices have slipped 7% each during the period.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services finds valuations of some stocks attractive for investors amid the ongoing market correction
"A sharp correction in the broader market has made the valuations in certain segments attractive. Defence stocks, which had run up too much too fast, have corrected sharply making their valuations attractive for long-term investors. Since a broad rally in the market will need indications of recovery in growth and earnings, investors can focus on micros rather than macros in the near-term. Plenty of stock-specific action ahead, despite headwinds from FII selling and Trump tariffs news," said Vijayakumar.