New Delhi, Dec 27 India’s long-term structural growth story remains intact, supported by favourable demographics, rising digital adoption, increasing financialisation of household savings and continued reform momentum, according to a new report.
The government’s ongoing policy initiatives will help reset the trajectory of corporate earnings over the medium term. Additionally, any resolution of the tariff stalemate with the US could act as an important external catalyst for markets, said Motilal Oswal Financial Services in its latest report.
“From an investment perspective, we have a positive stance on large-cap stocks, particularly in sectors where earnings growth is strong and valuations remain reasonable. Financials continue to be preferred segment, backed by healthy credit growth, improving return ratios and strong balance sheets. We also remain positive on consumption-linked sectors such as consumer discretionary and automobiles, as demand recovery broadens and revenue growth improves,” it noted.
Industrials and capital goods remain well positioned, benefiting from government-led reforms, infrastructure spending and localisation initiatives across manufacturing, electronics, data centres and energy transition-related segments.
“We are constructive on IT services from a medium-term perspective, as global technology spending is expected to recover gradually with stabilising macro conditions and increased focus on digital transformation, AI and efficiency-led adoption,” the report mentioned.
Healthcare and select pharmaceutical stocks offer defensive growth and portfolio stability, while digital and e-commerce themes continue to remain attractive due to strong demand trends, improving balance sheets and long-term compounding potential. However, stock selection remains critical in these segments.
2025 proved to be a year of consolidation and recalibration for Indian equity markets, marked by intermittent volatility and global headwinds.
Several domestic and global factors shaped market performance in 2025. Monetary easing by the Reserve Bank of India (RBI) emerged as a key stabilising force. During the year, it implemented four repo rate cuts amounting to a cumulative 125 basis points, bringing the policy rate down to 5.25 per cent.
This easing cycle was supported by low inflation and resilient economic growth, said the report.
Institutional flows also underwent a structural shift during the year. Strong domestic inflows and a buoyant primary market resulted in DII holdings surpassing FII holdings in Nifty-500 companies for the first time in March 2025, with this trend strengthening further by September 2025.
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