'SIP of Rs 5000 per month in Reliance, ICICI Bank, HDFC Bank would have given you...': Expert on long-term returns in stocks

India's stock indices experienced a period of growth from 2020 to 2024, reaching their peak in September of that year. However, they have been on a downward trend for the past five months. The Nifty50 has seen a 15% decrease from its highest point, while mid-cap and small-cap indices have experienced even larger drops of 20-25%.

Equity markets witnessed significant growth on Tuesday, as the Sensex saw a surge of 1,131.31 points (1.53%) to reach a closing value of 75,301.26 and the Nifty 50 climbed 325.55 points (1.45%) to end the day at 22,834.30. This uptick was fueled by encouraging global indicators and strong performance in the banking and financial sectors.

Talking about the market performance in the last few months,  A K Mandhan, a financial planner and SEBI registered research analyst, said that investing Rs 5000 per month in top 10 companies in the Nifty 50 index would have given a big sum if investors invested in a disciplined manner.

"SIP of 5000/Month in Top 10 Nifty Stocks for 5  Years become: Reliance: 4.37 Lk @ 15%; TCS: 3.84 Lk @ 10%; HDFC Bank: 3.92 Lk @ 11%; ICICI Bank: 5.78 Lk @ 26.61%; HUL: 3.73 Lk @ 8.65%; Infosys: 3.89 Lk @ 10.35%;ITC : 5.16 Lk @ 21.92%; SBI: 5.33 Lk @ 23.23%; HDFC Ltd: 3.70 Lk @ 8.34%; Bajaj Finance: 5.13 @ 21.63%," Mandana wrote.

As of March 18, 2025, the top 10 companies in the Nifty 50 index by market capitalisation are:​

Rank    Company    Market Capitalization (Rs crore)
1    Reliance Industries    16,78,555
2    HDFC Bank    13,08,307
3    Tata Consultancy Services (TCS)    12,65,336
4    Bharti Airtel    9,34,803
5    ICICI Bank    8,95,988
6    Infosys    6,60,513
7    State Bank of India (SBI)    6,44,982
8    Bajaj Finance    5,31,856
9    Hindustan Unilever    5,18,000
10    ITC    5,00,000

Investing in dips

According to a recent note from LKP Securities, the significant sell-off in the market has brought down the Nifty 50 price-to-earnings (PE) ratio for CY2025 earnings to 18.8x, presenting an appealing investment opportunity.

The brokerage suggested that amidst the current market conditions with substantial price corrections, large-cap and large-mid-cap stocks are a wise choice for investors looking for sustainable growth and stability. LKP Securities highlights sectors like consumer durables, two-wheelers, tractors, banking, and capital goods as having a competitive advantage in the current economic landscape, making them attractive prospects for investors with a medium to long-term investment horizon.

Here are 10 large-cap and mid-cap stock recommendations by the brokerage:

> State Bank of India (SBI): LKP has issued a 'BUY' rating for SBI with a target price of Rs 890, suggesting an upside potential of 23%.

> Larsen & Toubro (L&T): LKP Securities has assigned a 'BUY' rating for L&T with a target price of Rs 4,070 (28% upside), citing L&T's strong execution track record, solid balance sheet, and improving returns on equity (RoEs).

> Kotak Mahindra Bank (KMB): Trading below its historical average, KMB is rated a 'BUY' by LKP with a target price of Rs 2,314, representing a 16% upside potential.

> Mahindra & Mahindra (M&M): LKP Securities reaffirms a 'BUY' rating for M&M with a target price of Rs 3,378, valuing the core business at Rs 2,984 and subsidiaries at Rs 394 per share. This forecast indicates a 10% upside potential.

> Axis Bank is currently trading at 1.3x FY27E BVPS, which is below its three-year average of 1.9x. LKP recommends a 'BUY' rating with a target price of Rs 1,251, suggesting a potential upside of 21%.

> Bajaj Auto is trading at 22x FY27E earnings, with LKP giving it a 'BUY' rating and a target price of Rs 9,177, indicating a potential upside of over 22%.

> Havells India was chosen by LKP Securities and it has assigned a 'BUY' rating with a target price of Rs 1,770, showing an upside potential of 21%.

> NMDC has a stock trading at 6x EV/EBITDA FY27E, with LKP giving it a 'BUY' rating and a target price of Rs 88, suggesting a potential upside of 35%.

> Ashok Leyland has been designated a 'BUY' rating by LKP, with a target price of Rs 266, reflecting a potential upside of 34% based on its 18x FY27E earnings valuation.

> AIA Engineering has also received a 'BUY' rating from LKP, with a target price of Rs 4,230, showcasing an attractive valuation and a potential upside of 32%.