Diwali stock picks: SBI, Airtel, BEL, Vedanta Aluminium, HDFC AMC among top buys for Samvat 2083

Samvat 2082 tested investors’ patience as rising US yields, elevated crude oil prices, supply-chain concerns and a global rally concentrated in artificial intelligence weighed on Indian equity markets, according to a report by Monarch Networth Capital. Despite weak index returns, corporate earnings remained resilient while market valuations corrected sharply.

For Samvat 2083, Monarch expects returns to be driven by earnings and favours consumption-linked sectors and banking, financial services and insurance. Its Diwali stock picks focus on strong fundamentals, sound governance and reasonable valuations, with stock selection preferred over following market trends.

The report said the Nifty 50’s 12-month forward price-to-earnings multiple fell from 24.8 times in late 2024 to 17.2 times by September 2026. Such sharp corrections have historically triggered the next phase of wealth creation, it added.

Monarch said market sentiment appeared more stretched than fundamentals. India’s weight in the MSCI Emerging Markets index nearly halved from about 20 per cent to 11% per cent largely unwinding foreign overweight positions. Foreign portfolio investors sold large-cap shares in the secondary market but remained active buyers in initial public offerings and shifted towards small-cap and mid-cap stocks.

Their broader return may require lower tax friction arising from the overlap between securities transaction tax and capital gains tax, calmer energy markets and an unwinding of the AI trade, the report said. It added that markets were already pricing in much of the known bad news.

Monarch identified the Eighth Pay Commission as its key theme for Samvat 2083. It expects the commission’s recommendations to be accepted in FY28, raising incomes for more than 2 crore employees and pensioners. Based on earlier trends, additional spending could flow into automobiles, travel and tourism, premium beverages and consumer durables.

BFSI is its second key conviction, supported by credit and deposit growth above 15 per cent, multi-year-best asset quality, below-average valuations and leadership changes at several institutions. Select capital-market businesses remain attractive as steady compounders. Overall, it advised moderate return expectations and disciplined asset allocation as markets move towards earnings-led growth.

Monarch as picked Aster DM Quality Care (Target Price: Rs 835), Bharat Electronics (Target Price: Rs 449), Bharti Airtel (Target Price: Rs 2,270), Blue Star (Target Price: Rs 1,911), Carborundum Universal (Target Price: Rs 1,563), CCL Products (Target Price: Rs 1,415), HDFC Asset Management Company (Target Price: Rs 2,680), Indegene (Target Price: Rs 691), Pricol (Target Price: Rs 800), State Bank of India (Target Price: Rs 1,265), TBO Tek (Target Price: Rs 2,043), Vedanta Aluminium (Target Price: Rs 525) and Va Tech Wabag (Target Price: Rs 2,235).