The Indian stock market, represented by the benchmark Nifty 50, is poised to conclude the current year with moderate gains. This performance comes amidst challenges including significant foreign capital outflows, subdued corporate earnings, and the impact of US tariffs. Year-to-date, the Nifty 50 has advanced close to 10%, while the broader Nifty 500 index has risen approximately 6%.
Analysts are optimistic that the upcoming year will outperform 2025, driven by a rebound in corporate profits and a healthier macroeconomic environment. Brokerage firm Kotak Securities elaborated on this outlook, stating, "We expect a somewhat better calendar year 2026 with a strong recovery in earnings, improved domestic consumption demand on the back of GST and income tax rate cuts and lower interest rates, and a likely better macro on the likely conclusion of the India-US trade deal."
Kotak's Top Long-Term Stock Recommendations
Shrikant Chouhan, Head of Equity Research at Kotak Securities, has identified ten stocks that investors should consider for their long-term portfolios. The list spans sectors like banking, housing finance, steel, consumer durables, and IT.
Banking and Financial Services Picks
ICICI Bank (Previous Close: ₹1,350.55 | Fair Value: ₹1,800 | Upside: 33%): As India's second-largest private bank, ICICI boasts a diversified loan book. Chouhan highlights its best-in-class profitability with a Net Interest Margin (NIM) around 4.3%, Return on Assets (RoA) near 2.3%, and Return on Equity (RoE) between 16-17%. Its asset quality remains strong, supported by a substantial contingency buffer.
Aadhar Housing Finance (Previous Close: ₹484.35 | Fair Value: ₹625 | Upside: 29%): This company is a key player in the structurally attractive affordable housing sector. Chouhan points to its robust Asset Under Management (AUM) growth, 100% secured retail book, and strong profitability metrics (ROA ~4.2%, ROE trending 17-18%) as key strengths.
Industrial and Manufacturing Champions
Jindal Steel (JSL) (Previous Close: ₹986.50 | Fair Value: ₹1,250 | Upside: 27%): A leading integrated steel producer, JSL is in the midst of a significant capacity expansion. The commissioning of new projects focused on higher-margin products is expected to drive a healthy 21% EBITDA CAGR and 30% EPS CAGR over FY25–28E.
Thermax (Previous Close: ₹3,011.70 | Fair Value: ₹3,575 | Upside: 19%): This energy and environment solutions provider is benefiting from scaling existing businesses and entering new markets like data centers and oil & gas in the Middle East. Management has guided for 20% year-on-year order growth in FY26.
Mahindra & Mahindra (M&M) (Previous Close: ₹3,621.20 | Fair Value: ₹4,200 | Upside: 16%): Chouhan remains constructive on M&M due to its leadership across its auto, farm equipment, and finance segments. The company's strategy focuses on value creation and capitalizing on market share dominance.
Consumer and Technology Focus
Eureka Forbes (Previous Close: ₹636.10 | Fair Value: ₹800 | Upside: 26%): Known for water purifiers and vacuum cleaners, the company aims for a 17-18% sales CAGR over FY25-30E, driven by its expansive service network and multiple sales channels.
Amber Enterprises (Previous Close: ₹6,647.40 | Fair Value: ₹8,100 | Upside: 22%): A key player in the room air conditioner segment, Amber expects to outperform industry growth. Revenues are projected to see a 23% CAGR over FY25-28E.
Varun Beverages (VBL) (Previous Close: ₹482.95 | Fair Value: ₹550 | Upside: 14%): PepsiCo's second-largest franchisee outside the US, VBL has announced new growth initiatives, including a partnership with Carlsberg and a planned entry into the Indian alcoholic beverage market.
Sagility (Previous Close: ₹52.62 | Fair Value: ₹59 | Upside: 12%): A pure-play healthcare BPO services provider, Sagility is seen as a company that can outperform broader IT services peers during periods of weak discretionary spending.
Infosys (Previous Close: ₹1,655.55 | Fair Value: ₹1,800 | Upside: 9%): Chouhan believes this IT major is executing well and could be a key beneficiary of AI in the medium term, despite near-term headwinds from revenue deflation in some segments.
Market Outlook and Investment Strategy
The overarching theme from Kotak Securities is one of cautious optimism for 2026. The anticipated recovery in earnings, bolstered by potential tax cuts, lower interest rates, and a possible India-US trade deal, forms the bedrock of this positive outlook. For investors, the current market correction has presented entry points in quality stocks across sectors. The recommended stocks are positioned to benefit from these broader macroeconomic tailwinds as well as their individual company-specific growth drivers, making them suitable for a long-term investment horizon.
