Kotak Institutional Equities has revised its model portfolio after a sharp market correction, adding new stocks and changing allocations across segments. Weightage on key stocks like RIL have been trimmed while the exposure to M&M has been increased.
The move comes after benchmark indices declined, with Nifty-50, midcaps and smallcaps falling between about 7% and 9%. Kotak said this correction has improved valuation comfort in several stocks. However, it maintained that valuations are still not cheap across the market.
The brokerage has also split its portfolio into large-cap and mid-cap baskets to better capture opportunities. These changes were outlined in its March 26, 2026 report “No gain without pain”
Kotak splits model portfolio into two
Kotak has divided its model portfolio into large-cap and mid-cap segments, moving away from a single combined list. It said the earlier portfolio was limited due to lack of value across most sectors. This resulted in a narrow set of stock ideas earlier
The firm added that the earlier portfolio was heavily skewed toward financials and healthcare due to limited opportunities elsewhere. With the recent correction, more stocks now meet its valuation criteria. This has allowed it to expand and reorganise its portfolio structure
Kotak is using a market capitalisation cut-off of $10 billion to separate large-cap and mid-cap stocks. It noted that India currently has 107 companies above this threshold even after the recent correction. This classification helps in more targeted stock selection
“We were earlier constrained by the lack of value in most parts of the market, which resulted in a very few names to recommend and a heavily skewed portfolio toward financials, healthcare services and pharmaceuticals,” Kotak said.
Stocks moved to mid-cap portfolio
Kotak has shifted Aadhar Housing Finance, Dixon Technologies and Devyani International into its mid-cap portfolio. These stocks were part of the earlier recommended portfolio but are now categorised based on size. The move reflects classification rather than a change in outlook.
The brokerage clarified that these stocks remain part of its coverage universe despite the shift. The change aligns with its revised structure of separating large-cap and mid-cap portfolios. It allows better comparison and allocation decisions within each segment.
Kotak also moved weights from these stocks into the mid-cap basket, where it is now building exposure after the correction. The firm indicated that mid-cap valuations have corrected meaningfully in recent weeks. This has created room for fresh additions in the segment.
“We reallocate Aadhar Housing Finance, Dixon Technologies and Devyani International from the previous recommended model portfolio to the mid-cap portfolio,” Kotak Institutional Equities said.
New mid-cap additions after correction
Kotak has added Coforge with a fair value of Rs 1,620 and an estimated upside of 39%. It has also included Home First Finance with a fair value of Rs 1,525 and about 61% upside. These are among the highest upside opportunities identified by the brokerage
Other additions include Eureka Forbes with a fair value of Rs 700 and around 54% upside, and Vishal Mega Mart with a fair value of Rs 145 and about 35% upside. Jubilant FoodWorks has a fair value of Rs 620 with about 34% upside. Embassy REIT has a fair value of Rs 480 with about 12% upside, in the model portfolio.
Five-Star Business Finance has been added with a fair value of Rs 310 and about 14% upside. Kotak said these additions come after a sharp fall in mid-cap stocks, improving the reward-risk balance. The brokerage has selectively added names where valuation comfort has emerged.
“We include Coforge with fair value of Rs 1,620 and 39% potential upside, Home First Finance with fair value of Rs 1,525 and 61% potential upside, and Vishal Mega Mart with fair value of Rs 145 and 35% potential upside,” Kotak added.
New large-cap entries: DLF, GCPL, Info Edge
Kotak has added DLF, Godrej Consumer Products and Info Edge to its large-cap portfolio after recent corrections in these stocks. It highlighted that DLF has fallen about 23% in three months and 26% in six months. This decline has improved valuation comfort in the stock
On DLF, Kotak said the leasing business is valued at around Rs 260 per share in its sum-of-the-parts valuation. It added that the land bank is being valued at a 65% discount to its estimated value. The brokerage also assigns no value to the terminal business in its estimates.
Info Edge has a fair value of Rs 1,300 with about 30% upside, according to Kotak. Godrej Consumer Products has a fair value of Rs 1,280 with about 23% upside after a 16% stock correction since late February 2026. The brokerage said both stocks offer reasonable upside after recent declines.
“We include DLF, Godrej Consumer Products and Info Edge in the large-cap portfolio and note the steep correction in the stock price and reasonable value in the stock,” Kotak said.
Reliance weight cut, Mahindra & Mahindra increased
Kotak has reduced the weight of Reliance Industries by 105 basis points in its model portfolio. The brokerage said the stock has held up well during the correction due to higher refining margins. These margins have benefited from supply disruptions in oil markets.
However, Kotak expects refining margins to decline as oil supply normalises. This has led to a relative reduction in allocation despite stable performance. The brokerage is reallocating capital to stocks that have corrected more sharply.
Mahindra & Mahindra weightage has been increased by 100 basis points after a 10% decline in its stock price since late February 2026. Kotak sees about 28% upside with a fair value of Rs 4,000. The change reflects a preference for stocks with valuation comfort after correction.
“We reduce weight on Reliance Industries by 105 basis points and add 100 basis points to Mahindra & Mahindra, which has fallen 10% and offers 28% potential upside to our 12-month fair value of Rs 4,000,” Kotak added.
Strategy behind the changes
Kotak said the recent correction across sectors and market caps has improved stock-level opportunities. It is using this phase to expand its portfolio and include more names. The brokerage is focusing on valuation comfort rather than broad market calls.
It stated that the changes are driven by recent price declines across stocks, which have improved reward-risk balance in several cases. At the same time, it remains cautious about overall market valuations. The firm continues to prefer selective stock picking.
Kotak also noted that valuations remain high in many consumption and investment stocks. It said the current situation is not comparable to earlier deep correction periods. The brokerage has not given a blanket positive call on the market.
“We use the recent steep correction to segregate our current model portfolio into two separate portfolios,” Kotak said.
Conclusion
Kotak Institutional Equities has adjusted its model portfolio by adding stocks with upside ranging from about 12% to 61% and reallocating weights across segments. The brokerage has expanded its stock list after a market correction of around 7% to 9% across indices.
The firm has reduced exposure to stocks that have remained resilient and increased allocation to those that have corrected. It has also reorganised its portfolio into large-cap and mid-cap segments.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.