Bank of America (BofA) Securities has turned constructive on Nifty after two years of remaining cautious on the Indian stock market, and now sees 12% upside potential in the benchmark index to rally to 26,200 by the end of the year. In its latest note, BofA Securities highlighted that its earlier cautious stance that markets may stay volatile was driven by eight risks, five of which have already played out or been priced in. The remaining three risks could pose a 7% downside risk for Nifty in its bear case but in its base case scenario, it sees potential for Nifty at 26,200 by December 2026. Here are 22 key picks on which the international brokerage has ‘Buy’ calls on.

Financials (ICICI Bank, Kotak Mahindra Bank, Shriram Finance)

In the financial space, BofA Securities listed out ICICI Bank, Kotak Mahindra Bank and Shriram Finance as its key picks. ICICI Bank's valuation remains attractive in both absolute and relative basis, BofA said, expecting the lender to outgrow the industry by 2-3%. It added that Kotak Mahindra Bank’s valuation looks attractive for banks' mid-teens growth and 2-2.2% RoA profile, with clarity on the CEO transition likely to drive the stock price in the near term. For Shriram Finance, the analysts said that the company is better placed than peers considering potential rate hikes in the second half of FY27.

Also read | BofA turns bullish on Nifty after 2 years, cautious on small, midcaps. Here's what it expects now

Industrials (L&T)

Larsen & Toubro (L&T) was named as BofA Securities’ key industrial pick. It sees three key factors that could support the stock from here. These include limited incremental downside from the ongoing US-Iran conflict, potential $200 billion step-up in India's power capex to achieve energy security, and potential for L&T to benefit from Middle East capex post the conflict to rebuild infrastructure and potential gas pipelines. “Besides, over the medium term, we see an option value (not our base case) as L&T expands/grows its offerings within Defense, Shipbuilding, Nuclear power data centers and Semiconductors domestically,” it added.

Discretionary (Titan Company, Eternal)

Titan Company and Zomato-parent Eternal were listed as BofA Securities key stock picks in the discretionary space. While the brokerage needs to see how near-term growth trends pan out amidst gold price volatility for Titan, it expects revenue and earnings CAGR of mid-to-high teens longer-term. For Eternal, it said that the company remains well positioned in the India quick-com space. “While some concerns on competition persist, we see Blinkit's scale & network effects reinforcing strong growth & market leadership,” it added.

Regulated power utilities (NTPC, Power Grid)

BofA Securities named NTPC and Power Grid as its top regulated power utilities. “We believe, hyperscaler led data center build out (10GW by 2030) and increasing consumer durables penetration could structurally drive incremental power demand,” it said, adding that these together could add another 180 bps to peak power demand growth over FY25-30. With the current geopolitical backdrop, the government could double down on domestic energy sources like coal, nuclear, renewable and hydro, resulting in incremental 166 GW capacity additions and $200 billion investments across the power value chain, it further said.

Oil & Gas (ONGC, GAIL)

In the oil and gas space, BofA Securities said higher crude prices should improve oil and gas realizations NWG (New Well Gas) realizations for ONGC in the absence of a windfall cess. “We have a Buy rating on the stock given healthy dividend yield and undemanding valuation. With all else constant, INR depreciation benefits upstream companies due to dollar-linked pricing,” it added. For GAIL, it said that volatility in the natural gas trading business has reduced due to GAIL's ongoing cost-optimization measures, supporting the case for a potential upward re-rating of the stock.

Automakers (Bajaj Auto, Tata Motors, Ashok Leyland)

BofA Securities sees Bajaj Auto’s current multiples to see an upgrade as the business has diversified. Risk reward for Tata Motors CV meanwhile is positive, and the company offers a strong play on both India and EU CV cycle. Ashok Leyland shares have corrected on crude concerns even as volume prints have consistently surprised on the upside and growth outlook is set for an upgrade, it said.

Other stocks

Other key picks listed out by BofA Securities include staples (Godrej Consumer, Tata Consumer), materials (Coal India), metals (Hindalco), hospital (Apollo Hospital), real estate (Godrej Properties), wires and cables (Polycab, KEI Industries) and IT (L&T Technologies).

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.