Home / Markets / Stock Markets /  These stocks are Motilal Oswal's top picks in the midcaps space

The equity indices have been trading near all-time highs amid the expectations of a better FY22 with the midcap and smallcap indices sharply outperforming the Nifty and reset several benchmarks. The primary markets are also seeing a flurry of activity with several IPOs lined up.

Amid this positive setup, Domestic brokerage and research firm Motilal Oswal said that the market faces headwinds from the advent of a possible third covid wave, persistent inflation readings prompting a potential rate increase, and volatility around the US Fed taper talk.

Motilal Oswal's top ideas in the large caps are ICICI Bank, SBI, Infosys, HCL Technologies, UltraTech, M&M, HUVR, Titan, Divi’s Labs, SAIL, SBI Cards. Whereas, its top picks in the midcaps include Max Financials, Chola Finance, JK Cements, Indian Hotels, Deepak Nitrite, L&T Technology, Endurance Tech, Orient Electric, Solara, ABFRL.

''After FY21 ended with a solid 15% EPS growth for Nifty, we expect FY22 to commence with a bang and expect a further buildup over the remainder of FY22. 1QFY22 earnings are estimated to be strong despite the restrictions imposed, albeit benefitting from the deflated base of 1QFY21,'' it said in a note.

Motilal expects key drivers for Q1FY22 to be metals based on its strong pricing environment and higher exports, IT as it expects the strong performance to continue, BFSI despite muted asset growth, lower provisioning costs would drive strong earnings YoY, and consumer based on its expectations to post a healthy performance with 23–25% EBITDA/PAT growth, despite rising commodity cost pressure.

The brokerage maintains its overweight (OW) stance on BFSI, IT, Metals, Cement, and Capital Goods sector while it is Neutral in Consumer, Auto, and Healthcare. It remains underweight (UW) on Energy and Utilities and reduce weight in Telecom.

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