New Delhi, Dec 27 (NationPress) The integrity of India’s long-term structural growth narrative is firmly established, buoyed by favorable demographics, escalating digital integration, a shift towards financializing household savings, and an ongoing momentum of reforms, as highlighted in a recent report.

The government's persistent policy measures are set to reshape the trajectory of corporate profitability in the medium term. Moreover, a resolution to the tariff impasse with the US could serve as a significant external catalyst for market movements, according to Motilal Oswal Financial Services in their latest insights.

“From an investment viewpoint, we maintain a positive outlook on large-cap stocks, especially in sectors where earning growth is robust and valuations are reasonable. The financial sector remains a favored area, supported by strong credit growth, enhancing return ratios, and solid balance sheets. We also express optimism towards sectors linked to consumption, such as consumer discretionary and automotive, as recovery in demand expands and revenue growth accelerates,” the report stated.

Industrials and capital goods are well-positioned, benefiting from government-led reforms, infrastructure investments, and initiatives aimed at localization across manufacturing, electronics, data centers, and segments related to energy transition.

“We hold a constructive view on IT services from a medium-term perspective, anticipating a gradual recovery in global technology expenditure, bolstered by stabilizing macroeconomic conditions and a heightened focus on digital transformation, AI, and efficiency-driven adoption,” the report detailed.

Healthcare and select pharmaceutical stocks provide defensive growth and stability for portfolios, while themes surrounding digital and e-commerce continue to attract attention due to robust demand trends, strengthening balance sheets, and potential for long-term compounding. However, careful stock selection is essential in these areas.

The year 2025 emerged as a period of consolidation and recalibration for Indian equity markets, characterized by intermittent volatility and global challenges.

A multitude of domestic and international factors influenced market performance in 2025. The monetary easing by the Reserve Bank of India (RBI) played a crucial stabilizing role. Throughout the year, the RBI executed four repo rate cuts totaling 125 basis points, lowering the policy rate to 5.25 percent.

This easing cycle was underpinned by low inflation and resilient economic growth, as noted in the report.

Institutional flows also experienced a structural transformation during the year. Strong domestic inflows and a thriving primary market led to domestic institutional investor (DII) holdings exceeding foreign institutional investor (FII) holdings in Nifty-500 companies for the first time in March 2025, with this trend further strengthening by September 2025.