Nomura Recommends 27 Stocks for Long-Term Gains Amid Market Uncertainties

Japanese brokerage Nomura has released its latest India equity strategy report, which comes in the wake of a subdued Q1 performance and the looming threat of US tariffs. Despite these challenges, Nomura maintains a positive outlook, identifying 27 preferred stocks across multiple sectors for long-term gains. Here's a detailed breakdown of the recommendations and the reasoning behind them.

Nomura has picked four stocks from the financial sector, including ICICI Bank, State Bank of India (SBI), Axis Bank, and HDFC AMC. The brokerage is optimistic about the banking sector, noting that system liquidity conditions are likely to improve with the Reserve Bank of India (RBI) taking measures to ensure adequate liquidity. The valuations of these banks remain attractive, and the long-term prospects of AMCs are strong, driven by the growth in SIPs (Systematic Investment Plans) and new product avenues.

In the consumer goods and FMCG (Fast-Moving Consumer Goods) sector, Nomura has identified four stocks: Marico, Godrej Consumer Products (GCPL), Tata Consumer Products, and Dixon Technologies. The brokerage expects volume growth to recover gradually, with an uptick in rural demand and some green shoots in urban demand. Price hikes are expected to have a limited impact, and most sales growth will be volume-led. EMS (Electronics Manufacturing Services) companies like Dixon Technologies are poised to see strong growth, driven by new clients, export upticks, and component manufacturing.

For the auto sector, Nomura is bullish and recommends Mahindra & Mahindra (M&M), Uno Minda, and Ather Energy. The brokerage notes that most original equipment manufacturers (OEs) are primarily exposed to the domestic market with limited export exposure, which means the impact of US tariffs is expected to be minimal. This sector is likely to see steady growth, driven by domestic demand.

Nomura remains cautious about the infrastructure sector but has picked Larsen & Toubro (L&T) as the only stock to buy. The sector provides earnings visibility due to the order backlog, and L&T's total ordering prospects over the remaining 9MFY26 stand at Rs 14.8 trillion, up 64% year-on-year. This robust order book provides a strong foundation for future growth.

In the cement and real estate sectors, Nomura is positive and recommends UltraTech Cement and Lodha Developers. The brokerage prefers UltraTech for its sustainable cost-saving measures, while Lodha is expected to benefit from a gain in market share by Grade A developers. Both sectors are poised for growth, driven by increasing demand and favorable market conditions.

Nomura is cautious about the capital goods and defense sectors but recommends CG Power and Industrial Solutions, GE Vernova T&D India, and Hindustan Aeronautics (HAL). The brokerage remains selective, preferring stocks with diversified earnings growth levers. These companies are expected to perform well due to their strong market positions and growth potential.

In the IT services sector, Infosys is the only Indian IT stock that Nomura recommends. The brokerage believes that rising macroeconomic risks in the US due to Trump's tariff policy may weigh on decision-making and discretionary demand for IT services. However, companies with relatively better growth visibility, like Infosys, are expected to perform well.

For the oil and gas sector, Nomura's preferred picks are Reliance Industries (RIL), Bharat Petroleum Corporation (BPCL), and Mahanagar Gas (MGL). The brokerage expects oil prices to remain range-bound between $65-70 per barrel, with healthy refining margins. City Gas Distributors (CGDs) are expected to do well despite a cut in APM (Administered Price Mechanism) allocation, thanks to a benign imported LNG (Liquefied Natural Gas) price outlook and robust volume growth.

In the pharmaceutical and healthcare services sector, Nomura has identified stocks with strong growth potential. The brokerage remains optimistic about the sector's long-term prospects, driven by increasing demand and favorable market conditions.

Overall, Nomura's recommendations provide a balanced portfolio of stocks across various sectors, offering investors a diversified approach to long-term gains in the Indian market.