Motilal Oswal Lists 40 Stocks to Watch in Q2 Earnings Season

Indian stock markets have grown more appealing after significant valuation declines, according to a recent analysis by Motilal Oswal Financial Services (MOFSL). The brokerage firm anticipates continued solid earnings growth despite ongoing global uncertainties but emphasizes careful stock selection as market gains will increasingly hinge on individual company performances.

MOFSL projects a 22% year-over-year increase in aggregate profit after tax for the companies it covers in the September 2026 quarter, marking the strongest quarterly earnings growth in nearly three years. When excluding oil marketing companies, this figure rises to 24%, and the Nifty-50 index earnings are expected to climb by 27% in the same period.

The brokerage pointed out that Indian markets have seen a sustained correction in valuations, especially for large- and mid-cap stocks, which have fallen 31% and 36% from their peaks earlier in 2024. This adjustment reflects ongoing market consolidation and a recovery in corporate earnings from the lows experienced in fiscal year 2025.

MOFSL’s research identifies promising investment opportunities across sectors such as banking, financial services, information technology, manufacturing, automobiles, consumer goods, and healthcare. The firm’s model portfolio includes a mix of well-established large-cap companies and emerging mid-cap names, aiming to balance stability and growth potential.

Among the blue-chip stocks featured are ICICI Bank, HDFC Bank, State Bank of India, Infosys, Larsen & Toubro, Bharat Electronics, Titan Company, Reliance Industries, Bharti Airtel, and Apollo Hospitals. These companies represent key sectors driving India’s economic expansion and benefit from robust earnings visibility.

The portfolio also emphasizes select mid-cap and new-age companies such as Meesho, PhysicsWallah, Jubilant FoodWorks, GE Vernova T&D, Kirloskar Oil Engines, Oberoi Realty, Pearl Global, and Fujiyama Power. These firms are poised to capitalize on niche markets and emerging growth trends in the economy.

MOFSL maintains an overweight position in diversified financials, information technology, new-age platforms, manufacturing, industrials, and discretionary consumption sectors. Conversely, the firm takes a cautious stance on private banks, energy, telecom, commodities, utilities, and renewables, while holding neutral views on healthcare and automobile segments.

The financial sector exposure in the model portfolio includes names like AU Small Finance Bank, RBL Bank, Shriram Finance, BSE, HDFC AMC, and L&T Finance, alongside the major banks. In technology and new-age platforms, holdings include Coforge and Eternal in addition to Infosys and Meesho.

Manufacturing and industrial stocks in the portfolio feature Dixon Technologies, Bharat Electronics, GE Vernova T&D, and Kirloskar Oil Engines. Consumer sector picks include Titan Company, Jubilant FoodWorks, Radico Khaitan, and Indian Hotels. Automobile exposure is represented by Mahindra & Mahindra, TVS Motor, and Happy Forgings.

Energy and telecom positions are concentrated in Reliance Industries and Bharti Airtel, while commodities, utilities, and renewables include Hindalco, Waaree Energies, and Adani Enterprises. Healthcare stocks include Mankind Pharma and Apollo Hospitals.

The mid- and small-cap allocation contains Oberoi Realty, Inventurus Knowledge, Rubicon Research, Pearl Global, Fujiyama Power, PVR Inox, and SPR Auto Tech. Notably, PVR Inox holds a neutral recommendation status, with the other mid- and small-cap stocks rated as Buys.

MOFSL predicts the model portfolio will achieve profit growth rates of 19% in fiscal year 2027 and 14% in fiscal year 2028, following a 13% increase in fiscal year 2026. The firm’s investment approach centers on companies with clear earnings momentum and exposure to long-term growth themes within India's expanding economy.

The brokerage highlights that while valuations are now more attractive, market participants should remain vigilant regarding external factors such as global interest rates, energy price fluctuations, geopolitical risks, and foreign investment flows. Differentiating firms with sustainable earnings growth from those benefiting from low base effects will be critical for investors.

Motilal Oswal’s latest stock recommendations provide a comprehensive guide for investors looking to navigate the evolving Indian equity landscape amid shifting market dynamics and macroeconomic trends.