Motilal Oswal Financial Services has realigned its Model Portfolio to ride the next leg of recovery. "While the earnings outlook remains encouraging, concerns around a potential third COVID wave and sell-offs by FIIs remain overhangs. Thus, we realign our Model Portfolio to navigate these headwinds," the brokerage has said.
Buy the stock of ICICI Bank, Axis Bank
ICICI Bank and Axis Bank are stocks to buy after the brokerage has increased its overweight stance on both these stocks. "We increase our Overweight stance on ICICI Bank (+300 basis points) and Axis Bank (+215 basis points) as the valuation appears compelling after the recent price correction, driving us to increase our allocations. On the other hand, the earnings outlook remains strong. PCR has improved sharply, while additional provision buffers should limit the impact on credit costs," the brokerage has said.
Interestingly, the brokerage has reduced its weight on the stock of State Bank of India, marginally, but maintain our Overweight (+171bp) stance. "We reduce our Underweight stance on Kotak Mahindra Bank (-198 basis points) and increased underweight on HDFC Bank (-391 basis points)," the brokerage has said.
Reduction in underweight stance on HDFC and Bajaj Group
For NBFCs, Motilal Oswal Financial Services has reduced its underweight stance on HDFC (-130 basis points) and Bajaj Group (- 183 basis points) given our belief that both these strong franchises will continue to outperform with strong delivery on their operational performance.
"We remain moderately Overweight on Shriram Transport Finance (+34bp) as we believe that it will stand to benefit from an expected CV up-cycle and strong demand in used CV and Underweight on CIFC (-27bp) as we believe that valuations now adequately capture the expected operational performance. Furthermore, we are Overweight on Muthoot Finance (+146 basis points) for the relative safety it offers in these uncertain times," the brokerage has said.
The stocks listed are taken from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.