“We recommend selective buying for long-term gains,” Prabhudas Lilladher said in its India strategy note on Tuesday, February 25.
The brokerage has also cut its bull case target to 27,041 from 29,263 earlier, while the base case target has been revised further down to 24,337 from 25,082 earlier. The index currently trades below all these levels.
Since the brokerage’s last strategy report on January 10, the Nifty has declined nearly 5% amidst tepid consumer demand, a weak currency and geopolitical headwinds post Donald Trump taking charge as President of the US.
“While the Reserve Bank of India has spent nearly $70 billion in supporting the rupee, the selling by FIIs has also led to tight liquidity in the markets,” Prabhudas Lilladher’s note said.
The brokerage expects a gradual recovery in demand as it believes that food inflation has peaked, the repo rate cut and OMO announced by the RBI will ease liquidity in the next three to six months along with an income tax cut, increase in religious tourism and a higher government capex allocation.
Although the brokerage expects the market to remain volatile in the near-term, it expects stability by the end of the fourth quarter of the current financial year. “We expect the impact of various government initiatives, and monsoons to start reflecting in improved consumer demand by the second quarter of financial year 2026.
Prabhudas Lilladher has also highlighted themes to play for the long term and they include:
- Capex Story – Including Capital Goods, Infra, Ports, EMS, New Energy, Data Centers, Railways, and Defence
- Healthcare – Hospitals and Pharma
- Tourism – Aviation, Hotels and Accessories
- Discretionary Consumption – E-commerce, Jewellery, Food Services and Retail
- Financialisation of Savings – Capital Market Entities and Digital Public Infra
In terms of specific stocks, Prabhudas Lilladher has increased its weightage in Maruti Suzuki, ICICI Bank, Kotak Mahindra Bank, ABB India, Bharat Electronics, Interglobe Aviation, ITC and Bharti Airtel.
On the flipside, it has cut its weightage in L&T, Titan, Hindustan Unilever, Reliance Industries, HCLTech, HDFC AMC among others.
From its high conviction portfolio, Prabhudas Lilladher has replaced Ambuja Cement, Siemens, Lemon Tree, Praj Industries, Jindal Stainless, Cyient and Cyient DLM with ABB, Astral, Chalet Hotels, Cipla, Ingersoll Rand, Kaynes Tech, and Maruti Suzuki.