Stock to buy for long term: Escalating tensions between the US, Israel and Iran are expected to remain a near-term overhang for Indian equities, primarily due to the risk of higher crude prices and potential disruptions to global energy supply, said Phillip Capital in a recent report.
While these geopolitical tensions could weigh on investor sentiment in the short term, the brokerage believes the current correction could offer attractive entry opportunities for long-term investors and should be viewed as an opportunity to accumulate quality stocks.
“US-Israel and Iran war will be a near-term overhang on Indian equities due to risk from higher oil prices and energy supply. Lasting supply constraints will be a negative for Indian GDP and earnings, currently we expect only a short-term disruption.”
Stocks to buy for long term
Despite the geopolitical uncertainty, Phillip Capital remains constructive on Indian equities and has highlighted several stocks it believes are well positioned to benefit from the medium-term growth cycle.
its top picks include Larsen & Toubro (L&T), Schneider Electric, Hindustan Aeronautics (HAL), Bharat Electronics (BEL), JK Cement, Ultratech Cement, Amber Enterprises, MTAR Technologies, Coforge, Hindalco, Tata Steel, Axis Bank, Titan Company, Ashok Leyland and Lumax Auto.
The brokerage believes these companies are positioned to benefit from strong domestic investment trends, infrastructure spending and improving corporate earnings visibility. Phillip Capital has also adjusted its model portfolio to increase allocations toward sectors such as capital goods, defence, banking and consumer staples, while trimming exposure to autos, IT, oil & gas and pharmaceuticals.
Nifty target 2027
Phillip Capital expects corporate earnings growth to remain the key driver of market performance over the next two years. It forecasts Nifty earnings growth of 5% in FY26, followed by 17% in FY27 and 14% in FY28.
Based on these projections, the brokerage assigns a valuation multiple of 19.0–19.5 times forward earnings, implying a Nifty target range of 26,500–27,500 by March 2027.
The brokerage has also outlined three possible scenarios for the index over the next 12 months. In the bear case, the Nifty could trade between 23,760 and 24,975, assuming FY28 earnings per share (EPS) of 1,320–1,350 and valuations of 18–18.5 times. In the base case, the index could reach 26,220–27,690, based on FY28 EPS of 1,380–1,420 and valuations of 19–19.5 times. In the bull case, Nifty could climb to 28,600–29,725, assuming FY28 EPS of 1,430–1,450 and valuation multiples of 20–20.5 times.
Phillip Capital pointed out that current valuations appear reasonable when viewed against longer-term earnings potential. The Nifty is currently trading at 19.2 times one-year forward PE and 16.6 times two-year forward PE, which the brokerage considers attractive from a FY28 perspective.
“Indian equities – accumulation to pay-off: We retain our constructive stance on equities; returns could be tepid in the near-term, but more attractive in the long-run. Strategies of churning and buy-on-dips will aid alpha creation.”
Sectors in focus
Sectorally, Phillip Capital expects capital goods to remain the best-performing segment, followed by defence, cement, automobiles and NBFCs. The brokerage also sees earnings growth improving meaningfully in banks and FMCG during FY27–FY28.
Other sectors where growth remains strong include electronics manufacturing services (EMS) and chemicals, while the IT sector could face earnings downgrades and pharma earnings are expected to remain weak in FY27. Due to the geopolitical overhang from the US-Iran conflict, Phillip Capital has also reduced exposure to the oil & gas sector.
In terms of market segments, the brokerage prefers large-cap companies and quality mid-caps, while remaining selective within the small-cap universe based on earnings visibility and valuations. So far in FYTD26, the mid-cap index has delivered returns of 16%, compared with 9% for the Nifty and 6% for the small-cap index, indicating stronger momentum among mid-sized companies.
Overall, Phillip Capital believes the current market correction could ultimately prove beneficial for investors willing to accumulate fundamentally strong companies during periods of volatility, particularly in sectors linked to infrastructure expansion, defense manufacturing and domestic consumption.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
