.jpeg)
Motilal Oswal: Balanced Valuations Signal Strong Recovery for Indian Markets
According to a Motilal Oswal report, domestic stock markets are now in a stronger position than last year, as the corporate earnings cycle appears to be emerging from a low. The Nifty is currently trading at 21.4 times earnings, close to its long-term average of 20.8 times.
Compared to the previous year, the Indian stock market is now in a better position. With earnings emerging from a low, the earnings cycle seems to be in a recovery mode, a Motilal Oswal Financial Services report said. It said the second quarter of FY2026 results came in line with expectations as the severity of earnings cuts has decreased.
According to a Motilal Oswal report, the earnings cycle has bottomed out, and double-digit growth is expected in the future. Valuations are also considered balanced. The Nifty is currently trading at 21.4 times earnings, close to its long-term average of 20.8 times.
The brokerage believes that several steps taken by the government, along with the continued domestic reforms, will help revive corporate earnings. Furthermore, the resolution of the current tariff standoff will prove to be a significant external catalyst for the market.
On the mid- and small-cap front, the brokerage said that though valuations in this segment remain pricey, the firm is focusing on select high-conviction small and mid-cap (SMID) stocks in its portfolio.
Want to get your story featured as above? click here!
Want to get your story featured as above? click here!
The report analyzed the consolidated earnings of 27 Nifty companies for Q2FY26 and found that they posted year-on-year growth of 9%, 8%, 5%, and 5%, respectively, which was ahead of estimates.
Of these, five companies exceeded their net profit (PAT) estimates by more than 5%, while seven companies fell below estimates. On the EBITDA front, six companies performed better than expected, while three lagged.
The report stated that companies like Coal India, Axis Bank, Hindustan Unilever (HUL), Kotak Mahindra Bank, and Eternal put pressure on the overall Nifty earnings. Out of the 27 companies, seven reported weaker-than-expected results, five better, and fifteen in line with estimates.
Meanwhile, an Elara Securities report indicated that foreign investors continued to reduce their stakes in select defensive sectors, such as energy and consumer goods, while increasing investments in cyclical and growth sectors, such as transportation, telecommunications, and healthcare.
