Select brokerage firms pointed to earnings momentum and broader market conditions as key drivers, while maintaining a positive view on opportunities ahead. They believe domestic equities could be entering another phase of broad-based recovery, led by banking stocks, telecom companies and a potential bottoming out in large-cap IT.

Monarch Networth Capital (MNCL) said largecaps are poised for a rebound, while small- and midcaps (SMIDs) offer selective stock-picking opportunities after an 18-month correction. The brokerage said India's long-term investment story remains intact, supported by structural reforms, strong corporate balance sheets, rising formalisation of the economy and a favourable macroeconomic backdrop.

In a separate market update, IDBI Capital said global equities largely held their ground in May after strong gains in April, with US indices posting solid advances, Asian markets touching record highs and European markets delivering modest positive returns.

MNCL said investors should focus on the bigger picture instead of short-term volatility, citing growth drivers such as GST, PLI schemes, infrastructure spending, digitalisation, the shift in manufacturing to India and favourable demographics. It said India’s corporate sector is entering a stronger investment cycle.

The brokerage noted that corporate capex among the top 500 listed non-financial companies has almost doubled to around Rs 10 lakh crore from pre-Covid levels. Net debt-to-equity has fallen to 0.32 times, the lowest since FY08, while operating cash flow conversion remains above 80 per cent, giving companies room for fresh investments and capacity expansion.

On earnings, MNCL said the trend remains healthy despite global headwinds. During Q4FY26, operating profit for listed companies rose 13.2 per cent and profit after tax increased 9 per cent, while small- and midcaps outperformed with PAT growth of 17.3 per cent.

The brokerage also said RBI rate-cut cycles have historically supported small- and midcap performance by improving growth prospects, lowering borrowing costs and boosting operating leverage. It remains positive on both the Nifty and smallcaps, adding that the correction in some large-cap pockets has been excessive due to persistent foreign institutional investor selling.

Market participants believe that despite global geopolitical uncertainties and periodic market volatility, India's long-term growth outlook remains constructive, supported by strong macroeconomic fundamentals, healthy corporate balance sheets and sustained domestic participation.

India remains one of the most attractive investment destinations globally, supported by strong macroeconomic fundamentals, policy continuity, increasing domestic participation and a resilient corporate earnings cycle, said Vinit Bolinjkar, Head of Research at Ventura in their webinar 'Current Market Opportunities' on Tuesday. 

Ventura believes sectors linked to infrastructure development, healthcare, financialization, technology and sustainability remain well-positioned to benefit from India's long-term growth trajectory. “Investors should focus on businesses with strong earnings visibility, healthy balance sheets and clear growth catalysts while maintaining a disciplined long-term investment approach”, added Bolinjkar.

IDBI Capital said global markets in May were largely driven by earnings growth and AI momentum. It noted that all three major US indices ended the month higher, with the Nasdaq Composite rising more than 8 per cent, the S&P 500 gaining 5 per cent and the Dow Jones advancing about 3 per cent. In 2026, they are up around 16 per cent, 11 per cent and 6 per cent, respectively.

FactSet data showed that 85 per cent of S&P 500 companies reported a positive EPS surprise and 81 per cent posted a positive revenue surprise, with technology leading growth, followed by communication services, materials and consumer discretionary sectors.

Taken together, MNCL’s outlook points to selective opportunities in domestic equities, particularly in banking and fundamentally strong small- and midcap companies, while IDBI Capital’s update highlights firm global market support from earnings and technology-led momentum alongside a more subdued European backdrop.

"We continue to see promising opportunities across healthcare, power equipment, financial services, technology and emerging themes such as recycling and energy transition. While investors should remain mindful of geopolitical developments and global market volatility, the medium- to long-term outlook for Indian equities remains constructive," Bolinjkar from Ventura added.
 

Monarch Networth's top picks
Monarch Networth has picked SBI among its top three ideas, citing a favourable risk-reward proposition supported by improving asset quality, healthy loan growth, resilient margins and value-unlocking potential from subsidiaries.

HFCL and Hindustan Copper are its other two picks. The brokerage sees HFCL as a play on India's digital infrastructure boom, supported by export momentum, a record order book and exposure to 5G, defence and AI-driven data centre themes.

Hindustan Copper, an integrated copper miner, is positioned to benefit from rising domestic demand for copper, driven by electric vehicles, renewable energy and power infrastructure expansion.
 

IDBI Capital's top picks
IDBI Capital's preferred stocks include Tata Consultancy Services (Target price: Rs 3,137), APL Apollo Tubes (Target price: Rs 2,270), Manappuram Finance (Target price: Rs 353), City Union Bank (Target price: Rs 314), Kajaria Ceramics (Target price: Rs 1,370), Lemon Tree Hotels (Target price: Rs 165), Neogen Chemicals (Target price: Rs 2,001) and Greenply Industries (Target price: Rs 316).