HDFC Bank, L&T, Bajaj Finance, IndiGo shares among top trades as market eyes bounce back

With US stocks rallying overnight and Brent oil prices falling following the US suspension of air strikes on Iran's power plants and energy infrastructure, Emkay Global said a gap-up start is likely for Indian markets, even as uncertainties persist and the Strait of Hormuz remains closed.

"Peace looks highly likely now and is our base case assumption. We see it as a strong positive for India and expect the Nifty to rebound after a 5 per cent collapse in the last three trading sessions. OMCs, private banks, NBFCs, and autos are the best ways to play the recovery," Emkay Global said.

This brokerage suggested HDFC Bank Ltd, Larsen & Toubro (L&T), Bajaj Finance Ltd, InterGlobe Aviation Ltd (IndiGo), oil marketing companies such as BPCL, HPCL and IOC,  Shriram Finance and Ashok Leyland among top trades. 

"We see this as the bottom for the markets and maintain Dec-26E Nifty target of 29,000, based on +1sd PER of 20x. The short episode is unlikely to derail India’s consumption-led recovery, and we see FY27E Nifty EPSg on track at ~15 per cent," Emkay said. 

Top trades

L&T has fallen 22 per cent in the past one month. Emkay sees low damage to its Middle-East projects following the peace talks. HDFC Bank shares, which are down 19 per cent in the past one month, are trading at 1.5 times price to book value and over-reacted to the part-tim Chairman resignation, Emkay said. 
The brokerage said ATF prices should correct and that schedule normalisation in 2-3 months in case of IndiGo. 
Ashok Leyland is another stock that is beaten down on worries around diesel price hikes. Emkay likes Bajaj Finance as it sees minimal damage to earnings. For OMCs, Emkay said short war duration will result in manageable earnings impact, citing HPCL, BPCL and IOC are trading below their long-term average price to book ratios. 

"Meanwhile, we expect some of the 'protection' trades to reverse – Tech, Reliance Industries Ltd, and ONGC now look vulnerable, at least relatively," it said.

What Trump said

On Monday, the US president  Donald Trump in a post on Truth Social said the US and Iran, have had, over the last two days, productive conversations regarding a "complete and total resolution of our hostilities in the Middle East."

Based on the tenor and tone of these in-depth, detailed, and constructive conversations, which is expected to continue throughout the week, the US President said he instructed the Department of War to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five-day period, subject to the success of the ongoing meetings and discussions. 

Pricing in peace
The US suspended airstrikes on Iran’s energy infrastructure, citing ongoing talks and potential peace. Iran is yet to officially confirm, with the Speaker of the Iran Parliament denying the talks. 

"Markets turned cautiously optimistic, with Brent dropping 12 per cent and the SPX rallying 1.6 pre cent on the back of this news. We acknowledge that this is not a done deal yet, with the re-opening of the Strait of Hormuz the critical milestone in the process. However, the probability of peace is significantly elevated and we think markets will aggressively price that in," Emkay said.

Iran war impact on Q4
India is seen as a bigger beneficiary relative to other global markets because of its high exposure to imported crude. Emkay expects Brent to retrace to $75-80 a barrel, once clarity emerges. "We expect some impact on 4QFY26 earnings, with a spillover to 1QFY27. Supply chains are likely to take 1-2 months to normalise after the Strait of Hormuz reopens. Moreover, the damage to some of the energy infrastructure in the Middle East could delay the full normalisation of oil markets," it said. 

Nifty, SMID FY27 earnings 
Emkay estimated the earnings impact on the Nifty at 1-2 per cent (FY27E). SMID companies may see a larger downgrade, but it would mainly be restricted to 1-2 quarters, with a smaller impact on FY27 estimates, it said.

Notably, the Street is yet to react to the war, with both Nifty and broader market estimates unchanged in March 2026, Emkay said.