Indian markets have declined 0.7 per cent so far in February, setting the indices up for a fifth consecutive month of losses. In 2025 so far, the benchmark indices have dropped over a per cent, weighed down by global economic uncertainties and elevated domestic valuations.
The broader markets have faced a steeper decline, with the Nifty Midcap index slipping over 9 per cent.
The FPI sell-off is likely to continue as market sentiment remains weak, driven by US President Donald Trump’s tariff policies. Additionally, subdued corporate earnings have added to the correction in Indian equities. While Q3 earnings showed a slight improvement over the past two quarters, they have failed to uplift investor confidence.
InCred has outlined its high-conviction stock ideas for February 2025, emphasising a preference for large-cap stocks over mid- and small-cap equities. The firm expects a revival in personal consumption, supported by income-tax relief, and has accordingly introduced Bajaj Auto and Marico to its recommendations. However, it also anticipates that corporate earnings weakness and macroeconomic concerns will weigh on Nifty-50 returns.
Stock Performance Overview
According to InCred, its stock selections since September 2022 have delivered mixed performances. Skipper, Aditya Birla Sun Life AMC, and Bharat Forge have significantly outperformed the Nifty, whereas Deepak Fertilisers and Petrochemicals Corporation, Hero MotoCorp, and Pidilite Industries have underperformed.
New Additions to the List
InCred has made key additions to its list of recommended stocks:
Adani Ports and SEZ (ADD): The brokerage sees volume growth visibility and believes the stock presents an attractive valuation after experiencing a 23 per cent decline over the past six months.
Bajaj Auto (ADD): The firm highlights the company’s ability to maintain EBITDA margin neutrality amid the rising adoption of electric vehicles (EVs), with the share of EVs in its domestic product mix growing from 3 per cent in Q2FY24 to nearly 12 per cent currently.
Marico (ADD): InCred acknowledges Marico’s proactive measures to resolve inter-channel conflicts from the expansion of quick commerce while steadily progressing toward diversification, particularly in the food segment.
Shriram Finance (ADD): The brokerage remains positive on the company’s diversified asset under management (AUM) mix, rising non-vehicle loan contributions, and improved underwriting and collection processes, which provide asset quality assurance.
Stock Removals
InCred has removed Aditya Birla Sun Life AMC (ADD) from its list, citing intense competition in the asset management space and a volatile capital market environment, which could impact equity price movements and systematic investment plan (SIP) inflows.
Technical Trend Favourable Stocks
The brokerage has also identified Bajaj Finance and Petronet LNG as stocks with favourable technical trends, maintaining an ‘ADD’ stance on both.
Overall, InCred’s February 2025 strategy underscores its focus on large-cap stocks, with a preference for companies demonstrating resilience in evolving market conditions. While macroeconomic headwinds and earnings pressure could limit Nifty-50 gains, the brokerage remains optimistic about select names poised to benefit from sector-specific tailwinds. Investors looking for stability may consider these high-conviction ideas, keeping an eye on ongoing market developments.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
