Trent, IRFC, PFC, VBL, AEL: Big 2024 largecap winners turn 2025 losers; 2026 outlook

A majority of large cap underperformers in 2025 were outperformers of 2024, and mostly belonged to sectors such as consumption, IT services, pharma, real estate and industrials. If one goes by ICICI Securities, focus on consumption over capex in 2025 could reverse in 2026. 

Underperformance in the previous year is a fertile hunting ground for outperformers of 2026, especially those related to domestic economy where there is higher probability of a positive surprise, it said. 

"However, this strategy could be risky and has to be supported by improving growth visibility, earnings upgrade and reasonable valuations relative to growth (if not cheap valuations)," the brokerage said.

A common theme among 2025 underperformers was a mix of high valuations, exposure to the external sector, and growth concerns. However, stocks with improving growth outlook and, in some cases, reasonable valuations such as SBI, Vedanta, M&M, BPCL, Bharti Airtel, Bharat Electronics and Shriram Finance continued their momentum to outperform both in 2024 and 2025, ICICI Securities said.

Underperformers of 2024, which showed improved outlook, outperformed in 2025. They included Reliance Industries, Bajaj Finance, Axis Bank, Asian Paints and Titan Company. In both the aforementioned cases, outperforming stocks were related largely to sectors driven by domestic cyclical demand.

Among 2024 outperformers, post a 133 per cent rally, Trent shares fell 43 per cent in 2025 so far, as its FY26 and FY27 earnings got downgraded by an average 10 per cent. Varun Beverages fell 26 per cent this calendar against a 29 per cent rise in Calendar 2024. Indian Railway Finance Corp Ltd (IRFC) fell 26 per cent this calendar after a 50 per cent rise in 2024. 

Lodha Developers, DLF, Power Grid and a couple of IT stocks such as Infosys, HCL Technologies and Wipro are stocks that failed to deliver similar returns in 2025 after healthy 2024. 

ICICI Securities said outperforming stocks of 2025 are not necessarily destined to underperform in 2026 and some of the outperformers could continue their momentum in the new year provided the growth momentum continues. That said, the brokerage noted that a majority of underperformers of 2026 could emanate from the outperformers of 2025 like they did last year. 

The brokerage said markets will be unforgiving where growth concerns result in downgrades, especially in cases where stocks have run up leading to high valuations.

"The trend of domestic factors surprising positively due to conducive policy making and external factors remaining challenging in an increasingly inward looking policy making environment globally may continue, thereby, impacting stocks related to their respective areas," it said.

ICICI Securities said this outlook for 2026 points towards an overweight position for domestic cyclicals and asset heavy defensives.