Global brokerage Bernstein shifts its India stock picks as June-quarter earnings reveal a mixed picture, while it retains a 26,000 Nifty target and sees stock-specific opportunities driving returns.

Global research and brokerage firm Bernstein has reshuffled its India model portfolio following the conclusion of the June-quarter earnings season, adding Eternal, Paytm and Adani Ports while removing Avenue Supermarts (DMart). The changes underline Bernstein’s increasing preference for companies with identifiable earnings catalysts and competitive advantages as the broader market faces a more challenging earnings environment.

Bernstein believes the Indian equity market continues to offer opportunities beneath the headline indices, but the brokerage expects investors to rely increasingly on bottom-up stock selection rather than broad-based market gains.

Eternal, Paytm and Adani Ports Join the Portfolio

Bernstein has added Eternal to its India portfolio, citing the company’s competitive strengths in a sector where access to capital is becoming increasingly difficult. The brokerage believes the company continues to demonstrate advantages that could help it navigate a competitive environment.

Paytm has also been included, with Bernstein pointing to potential catalysts related to merchant discount rates (MDR). The addition reflects the brokerage’s view that regulatory and business developments could create opportunities for the digital payments company.

Adani Ports and Special Economic Zone has also entered Bernstein’s model portfolio, adding exposure to India’s infrastructure and logistics theme.

DMart Removed After Strong Outperformance

Bernstein has removed Avenue Supermarts, which operates DMart, from its portfolio following the stock’s recent strong performance.

The brokerage also highlighted concerns surrounding urban consumption and the growing competitive threat from quick-commerce companies. The rapid expansion of delivery platforms has increased competition for traditional retailers, particularly in urban markets.

Bernstein said it currently does not see a decisive direction for DMart, making the risk-reward profile less attractive compared with other opportunities in its coverage universe.

Earlier Portfolio Picks Retained

Despite the reshuffle, Bernstein has retained several stocks from its earlier India focus list. These include Larsen & Toubro, NTPC, Axis Bank, HDFC Bank, Nuvama Wealth Management and HomeFirst Finance.

The continued presence of several financial stocks means the portfolio remains relatively financials-heavy. Bernstein clarified that this is not necessarily a deliberate sector allocation strategy, but rather reflects the breadth of its coverage and the strength of its bottom-up conviction in selected financial companies.

M&M Remains Bernstein’s Auto Pick

In the automobile sector, Bernstein continues to favour Mahindra & Mahindra.

The brokerage pointed to the company’s strong Q1FY27 performance and believes it could deliver further improvement despite expectations of relatively subdued overall vehicle demand.

M&M’s product portfolio, execution and earnings performance have helped it remain Bernstein’s preferred exposure within the automobile segment.

Zydus Remains Healthcare Favourite

Bernstein has retained Zydus Lifesciences as its preferred healthcare stock.

The brokerage sees potential from the company’s innovation-led portfolio, particularly its US operations and differentiated products in the domestic market.

The focus on innovation and specialised products could provide Zydus with opportunities for relatively stronger growth even as broader healthcare-sector conditions remain mixed.

Q1FY27 Earnings Momentum Moderates

Bernstein’s portfolio changes come against the backdrop of a mixed Q1FY27 earnings season.

According to the brokerage, earnings growth across the NSE 200 moderated to around 8 per cent in the June quarter from approximately 12.5 per cent in the March quarter.

However, the headline figure masks significant differences between market segments.

Nifty 50 companies delivered a much stronger performance, with earnings growth accelerating to around 12.8 per cent, compared with almost flat growth in the previous quarter.

Companies ranked between 101 and 200 within the NSE 200 recorded more modest earnings growth of around 8 per cent.

Nifty Next 50 Faces Greater Pressure

The Nifty Next 50 delivered a weaker performance during the quarter, with earnings declining by nearly 4 per cent.

Bernstein attributed much of the weakness to losses at oil marketing companies, along with pressure across selected banking and cement companies.

The divergence between the Nifty 50 and other segments highlights the uneven nature of the current earnings cycle and explains why Bernstein sees greater importance in individual stock selection.

Ex-OMC Earnings Picture Looks Stronger

The underlying earnings picture appears stronger when certain weak sectors are excluded.

Bernstein estimated that NSE 200 earnings growth could have reached around 19 per cent in the June quarter if oil marketing companies were excluded. Removing metals as well would have resulted in growth of approximately 15 per cent.

This suggests that headline earnings growth is being affected by weakness in specific sectors rather than representing a uniform slowdown across corporate India.

Tougher Base Effects Ahead

Bernstein expects earnings upgrades to become more difficult as favourable base effects fade.

The brokerage currently expects approximately 13 per cent earnings growth for the NSE 200, but cautioned that the comparison base will become tougher from September 2026.

This could restrict the scope for substantial earnings upgrades unless companies deliver stronger-than-expected operating performance.

For investors, this makes earnings visibility increasingly important. Companies that can consistently outperform expectations may continue to attract premium valuations, while businesses dependent on broad economic recovery could face greater scrutiny.

Bernstein Retains 26,000 Nifty Target

Despite the mixed earnings environment, Bernstein remains constructive on Indian equities and has retained its Nifty target of 26,000.

The target indicates that the brokerage continues to see upside potential in the Indian market, although it expects the path to be driven increasingly by individual companies rather than a broad-based earnings acceleration.

Bernstein believes the market remains interesting beneath the surface, with stock-specific opportunities potentially offering the best route to outperform in an environment where overall returns could remain moderate.

What Investors Should Watch

The latest portfolio reshuffle indicates that Bernstein is focusing on companies with specific growth triggers rather than simply chasing sectors that have already delivered strong returns.

For investors, key factors to monitor include the sustainability of Q1 earnings growth, management guidance, valuation levels, domestic consumption trends, quick-commerce competition, interest-rate movements and corporate capital expenditure.

Financial stocks continue to feature prominently in Bernstein’s portfolio, while infrastructure, digital payments, logistics, automobiles and healthcare provide additional exposure to different growth themes.

Market Outlook

Bernstein’s latest assessment suggests that the Indian market may be entering a phase where stock selection becomes more important than index-level momentum. With earnings base effects turning less favourable and broad-based upgrades becoming harder, companies with strong balance sheets, competitive advantages and visible growth catalysts could command greater investor interest.

The brokerage’s 26,000 Nifty target reflects continued confidence in India’s long-term market potential, but the mixed Q1FY27 earnings performance indicates that investors may need to remain selective.

The addition of Eternal, Paytm and Adani Ports, alongside continued preference for L&T, HDFC Bank, Axis Bank, M&M and Zydus, shows Bernstein’s preference for businesses where company-specific factors can potentially drive earnings even when the broader market environment remains challenging.