Stocks to buy: It was a tough last year for the Indian stock market as valuation woes, steep tariffs and record-high FII selling kept the upside in check. However, after steep underperformance, analysts find India’s relative valuations to be more lucrative.

This, along with steady earnings growth, could bring back investor interest in India in 2026, particularly for those seeking a hedge against risks like global AI-trade consolidation and potential unwind of the yen carry trade, opined CLSA analyst Vikash Kumar Jain in a note dated January 6.

According to the global brokerage, financials, cement, and select consumption names can offer balanced risk-reward to investors versus the historical average and the Nifty. “We prefer large caps where earnings visibility and positioning are better aligned, with a tilt toward consumption, rate-sensitives and IT in our India focus portfolio,” it added.

The brokerage holds 10-15 large and liquid stocks in its India portfolio since its inception in 2021. This portfolio has beaten the Nifty in 16 of the 20 quarters since its inception with an absolute return of 215% and total outperformance of 117ppts. However, it underperformed the Nifty 50 last year as it rose 7.7% as against an over 10% rise seen in the benchmark index.

Top Stocks to Buy

Currently, CLSA holds 15 stocks in its portfolio, with exposure to companies like Eternal, DMart, Bajaj Auto and Tata Motors in the consumption space. In rate-sensitive, it prefers IndusInd Bank and Godrej Properties. Infosys and Tech Mahindra remain the brokerage’s contrarian IT bets on improving India-USA trade dynamics. Meanwhile, value bets include Ultratech, ONGC, NTPC and ITC, while the large bank exposure is limited to ICICI Bank and SBI.

Here are the potential drivers for these stocks as per CLSA:

1. ICICI Bank | Target Price: ₹1700

Management transition or extension of Mr Sandeep Bakshi’s term overhang should go away between March to June, given his current term ends in October 2026. Also, a pick-up in loan growth should provide momentum, especially in an environment where system growth is picking up meaningfully, and management guidance is muted.

2. State Bank of India | Target Price: ₹1170

SBI’s ability to maintain and/or grow loan market share while keeping up with the return on risk-weighted assets (RoRWA), once HDFC Bank resumes its growth path, will be a key trigger.

3. Infosys | Target Price: ₹1814

With its high discretionary exposure, Infosys should perform well heading into 026, supported by an improving US macro backdrop and S&P 500 EPS growth consensus estimates of 13% for 2026 versus the 10-year average of 9%, as per CLSA.

4. ITC | Target Price: ₹485

Strengthening core businesses while premiumising and scaling high-return adjacencies will be a key driver.

5. UltraTech Cement | Target Price: ₹14,000

UltraTech Cement is currently set up for a perfect trigger environment in 2026 as the demand scenario has picked up in 3QFY26, with the recent goods and services tax (GST) cut providing an opportunity for the industry to implement a price hike in

4QFY26. “We expect a sharp uptick in UltraTech’s profitability over the next two years due to cost savings initiatives (Rs86/t out of Rs300/t already achieved) and a change in duty structure (coal cess being substituted by higher GST),” the global brokerage said.

6. NTPC | Target Price: ₹459

Key catalysts for NTPC in 2026 will be large GW-scale renewable capacity addition from 1Q26, award of its first nuclear power plant and GW-scale emission control equipment, apart from placement of large thermal equipment orders to improve decadal growth visibility.

7. ONGC | Target Price: ₹330

ONGC’s KG 98/2 cluster should ramp up to full capacity in 2026, boosting oil output by about 10% and gas by about 18%, according to CLSA. This first major field addition in decades adds ₹56-80/share to NAV and strengthens production visibility, it opined.

8. Eternal | Target Price: ₹483

Considering continued improvement in contribution per order, CLSA expects Eternal’s quick commerce business to break even in adjusted Ebitda in the March 2026 quarter. “This, coupled with declining competitive intensity as Zepto focuses on its secondary market listing, should reinforce confidence in Eternal’s dominance in this high-growth space,” it said.

9. Tata Motors CV | Target Price: NA

Signs of a revival in India’s commercial vehicle market are emerging, driven by rising freight demand, improving utilisation and lower upfront cost post-GST cuts. With fleet ages stretching and replacement demand building, CLSA believes the CV industry is on the cusp of an upcycle.

10. Tata Motors PV | Target Price: 450

CLSA also likes Tata Motors PV due to: (1) JLR is well-poised to grow at a lower base as production has normalised post cyberattack, (2) Average inventory levels for JLR are at lower levels, (3) JLR valuation is currently pricing in all adversity and trading at 1.2x EV/Ebitda versus 10-year average of 2x, (4) Better outlook for domestic passenger vehicles (PVs) due to GST cut and (5) Sierra launch would aid TMPV to maintain market share.

11. Bajaj Auto | Target Price: ₹10,604

In 2W space, CLSA is bullish on Bajaj Auto prefer BJAUT due to: (1) Three Pulsar model refreshes and one new launch planned over the next six-toeight months, which should help arrest market share erosion, (2) Launch of an affordable e-2W, enabling market share gains in the segment, (3) Revival in export volumes, and (4) KTM’s performance turnaround.

12. DMart | Target Price: ₹6105

Commitment of DMart’s management on geographical expansion is likely to be visible in the form of an acceleration in the pace of store addition in the next three months, especially in smaller (tier 2++) towns and opening of markets in large states like Uttar Pradesh, said CLSA. These should bring back focus on the core thesis of DMart as the lowest-cost and most-efficient operator to capture the large growth in organised retail in India, it added.

13. Tech Mahindra | Target Price: ₹1705

TechM continues to be a self-help story with sustained revenue and margin expansion, says CLSA, as it is targeting a 15% Ebit margin and higher-than-peer-average growth by FY27. It sees multiple margin levers to support the vision, along with a management team that is confident of a better 2HFY26 than 1HFY26.

14. Godrej Properties | Target Price: ₹2850

Its geographically diversified portfolio makes its business slightly acyclical, thus providing visibility of sustainable growth. The company trades at a significant valuation discount to its peers – such as Lodha and Oberoi – due to its historical track record of low profitability, which CLSA believes is changing and thus warrants a valuation rerating.

15. IndusInd Bank | Target Price: ₹725

The ability to instil investor confidence in its goal of reaching 1% ROA in the medium term is a key trigger for IndusInd Bank in 2026, along with CV cycle pick-up.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.