Indian Stock Market: Top Sectoral & Stock Ideas

Third Consecutive Gain After Sharp Decline

The Indian stock market enjoyed a third straight day of gains on Wednesday, 19 March 2025, following a turbulent period that saw the Nifty-50 plummet by roughly 16% since September 2024. This recent uptick offers a glimmer of hope after months of correction, with analysts suggesting that the worst may be nearing its end, paving the way for selective investment prospects.

The downturn was fuelled by persistent foreign institutional investor (FII) outflows, totalling around USD28 billion, alongside geopolitical unrest and lacklustre FY25 corporate earnings. However, RealisedGains notes that domestic institutional investor (DII) inflows of approximately USD44 billion have softened the blow, stabilising the market. This resilience suggests that FII selling pressure is losing its sting, bolstered by attractive large-cap valuations trading at a 10% discount to their long-term average.

Looking ahead, RealisedGains anticipates a corporate earnings recovery in FY26, with Nifty profit after tax (PAT) projected to surge by 16% year-on-year, a stark improvement from FY25’s modest 4% growth. Large-cap stocks, offering better risk-reward ratios than their pricier small- and mid-cap counterparts, stand out as prime picks. Their historical stability during uncertain times further enhances their appeal.

RealisedGains advocates an overweight stance on large-caps, favouring sectors like banking, financial services, and insurance (BFSI), IT, and healthcare for their growth potential and earnings clarity. The IT sector, however, faces headwinds from subdued discretionary spending and geopolitical jitters, delaying an expected recovery in spending to beyond CY25. While giants like Infosys and Wipro face downgrades, Tech Mahindra earns a ‘Buy’ rating for its transformation efforts, with TCS and LTIMindtree holding firm as top choices.

In the auto space, Tata Motors shines with its premium branding and electric vehicle (EV) focus, prioritising profitability over volume. Meanwhile, healthcare firms like IPCA, JB Chemicals, and Zydus excel, driven by strong performances in cardiac and gastro therapies. Conversely, life insurance struggles, with LIC reporting a 17.4% drop in weighted received premium (WRP) in February 2025, though private players like HDFC Life and SBI Life remain robust.

​Among large-caps, Reliance Industries stands out for its diverse energy-to-telecom portfolio, while Bharti Airtel benefits from 5G expansion. Larsen & Toubro (L&T) thrives on infrastructure demand, Maruti Suzuki rides a strong hybrid/EV pipeline, and Titan Company leverages its jewellery dominance. For mid-tier growth, HDFC AMC, Coforge, and Persistent Systems offer compelling opportunities in mutual funds and digital transformation, promising solid returns for discerning investors.