The domestic brokerage house, Motilal Oswal has made some significant changes in its model portfolio. The brokerage expects a gradual earnings recovery by FY26, prompting a slight increase in exposure to India-focused themes while trimming weight in select stocks with higher global exposure.
According to the brokerage, “Our model portfolio broadly reflects our preference for growth visibility and domestically focused plays in a still-strained global environment. We anticipate a gradual recovery in earnings by FY26, and we marginally raise our weights in domestic names.”
Let’s take a look at what is the brokerage latest update across various sector stocks –
Autos upgraded to Overweight
Motilal Oswal has upgraded Automobiles to an Overweight (OW) stance from Neutral. The brokerage house cited improving macro conditions such as GST 2.0 rationalisation, interest rate cuts, and healthier rural demand.
The brokerage retained allocations in Mahindra & Mahindra (M&M) and TVS Motor, while adding Happy Forgings to its preferred list.
According to the report, “Happy Forgings is our key preferred stock in the auto ancillary space, as it is a second-order beneficiary of the expected demand revival at OEMs post-GST 2.0 rate rationalisation.”
The firm noted that Happy Forgings key domestic customers – commercial vehicles and tractor segments have shown renewed strength in the second quarter, indicating room for sustained growth.
Financials stay in focus
Motilal Oswal continues to maintain an Overweight position in BFSI, though with nuanced changes within the segment. The brokerage remained bullish on large private banks such as ICICI Bank and Kotak Mahindra Bank, though it trimmed allocations in both by 100 basis points each.
The note highlighted, “We expect Max Financials to outperform in APE growth, product mix, VNB margin, and RoEV over H2FY26 and beyond, on the back of a favorable outlook for the life insurance industry driven by GST rate cuts, interest rate cuts, and a favorable base of H2FY25.”
Max Financials replaces Angel One in the model portfolio.
Consumer Discretionary shines, staples lag behind
The brokerage also remained optimistic on consumer discretionary names while keeping consumer staples underweight. It added IndiGo and V-Mart Retail to its list of preferred plays, replacing Jubilant FoodWorks to make room for the new inclusions.
“Indigo is a key beneficiary of the surge in travel demand. It has demonstrated resilience through cost control, strong network execution, and steady passenger growth,” said the brokerage.
Similarly, V-Mart continues to ride the formalisation wave in India’s smaller cities, benefiting from the shift towards organised retail and one-stop shopping formats.
Tech sees new-age inclusion
In the technology basket, Motilal Oswal remained neutral overall but shifted its exposure mix. While maintaining an underweight view on traditional IT services, it is now overweight on quick commerce, with Swiggy joining the portfolio.
The brokerage said, “Swiggy is a beneficiary of improved execution and rising QC AOV, which strengthens growth visibility while easing competition and moderating dark store expansion, accelerating the path to breakeven.”
Among IT service stocks, Coforge and Hexaware remain preferred mid-cap bets, while Tech Mahindra continues as the only large-cap name in the mix.
Healthcare reshuffled: Lupin replaces Sun Pharma
Healthcare continues to feature as an Overweight sector in the portfolio, but with a major swap. Lupin has replaced Sun Pharma.
The brokerage expects strong earnings momentum ahead adding, “Lupin is expected to post a continuation of strong earnings growth momentum with expectations of 35%, 26%, and 42% YoY growth in 2Q, 3Q, and 4QFY26, respectively.”
Industrials remain a favourite theme
Motilal Oswal continues to hold an Overweight view on industrials, a segment it describes as one of its “favourite themes.” Allocations remain unchanged in names such as L&T, BEL, Ultratech Cement, Dixon Technologies, and Kaynes Technology.
The brokerage expects EMS (electronics manufacturing services) companies to continue posting “super-normal growth,” driven by government incentives and export demand.
Other inclusions: Delhivery and VIP Industries
The brokerage also made key additions in the ‘Others’ category, introducing Delhivery and VIP Industries while dropping SRF and Macrotech Developers.
According to the report, “Delhivery is a beneficiary of capacity additions through organic and inorganic routes, market leadership position, increasing share of high-margin part-truckload (PTL) business, and cost efficiency driven by higher scale of operations.”
VIP Industries, meanwhile, is described as emerging from a “strategic reset year” with renewed focus on profitability, brand investments, and a stronger supply chain.