Kotak's strategy team led by Sanjeev Prasad remains constructive on India's medium-term macro and earnings outlook despite acknowledging that market returns may become more moderate once geopolitical uncertainties normalize.

The brokerage believes economic conditions remain encouraging, although investors should be prepared for periodic volatility and choppy market movements. The confidence largely stems from healthy corporate earnings momentum and a supportive macroeconomic environment.

According to Kotak's assessment:

• Macroeconomic conditions remain encouraging.
• The environment could remain volatile and uneven in the near term.
• Earnings growth visibility for FY27 and FY28 remains strong.
• Q1 FY27 results have reinforced confidence in corporate profitability.
• India Inc. continues to demonstrate resilience despite global uncertainties.

The brokerage believes the recent earnings season has strengthened the case for sustained profit growth across several sectors.

Kotak's valuation assessment presents an interesting contrast.

While overall market valuations appear reasonable from a top-down perspective, individual stock valuations remain less attractive in certain pockets of the market.

This suggests that future returns may become increasingly dependent on stock selection rather than broad market expansion.

Kotak has made notable adjustments to its large-cap model portfolio.

Removed:

• TCS
• DLF
• Macrotech Developers (Lodha)

Additional Allocation Distributed To:

• Adani Ports – 150 bps
• HDFC Life – 100 bps
• Shriram Finance – 60 bps
• Eternal – 50 bps
• GMR Airports – 50 bps
• Hindalco Industries – 50 bps

Kotak believes recent corrections have created attractive opportunities in selected stocks.

Adani Ports has corrected nearly 10% from its recent highs amid market concerns regarding a reported acquisition in the United Kingdom. Kotak appears to view the correction as an opportunity rather than a structural concern.

Similarly, HDFC Life has faced pressure due to regulatory concerns surrounding the insurance sector. Kotak believes the stock price already reflects these uncertainties and therefore offers a more favorable risk-reward profile.

Kotak has also reshuffled its mid-cap portfolio.

Added:

• Kalpataru Projects International

Removed:

• 360 One Wam

The inclusion of Kalpataru Projects reflects optimism toward infrastructure, EPC execution and order-book visibility, while the exit from 360 One indicates a shift in portfolio preference toward sectors offering stronger relative upside.

• FY27 earnings growth remains the primary market support.
• Stock selection is becoming more important than broad index exposure.
• Infrastructure, ports, insurance and financials are gaining preference.
• Technology and select real-estate names have seen reduced allocation.
• Moderate returns may replace the strong gains witnessed in earlier phases of the bull market.

Kotak's latest strategy note remains constructive on India's earnings trajectory while acknowledging that future market gains could become more selective. The brokerage is positioning portfolios toward sectors where valuations appear attractive relative to growth prospects, particularly ports, insurance, infrastructure and select financials. Investors should note that the emphasis is shifting from broad market participation to careful stock selection as valuations become more differentiated across sectors.

tags: Kotak Strategy, Sanjeev Prasad, Adani Ports, HDFC Life, Kalpataru Projects, Stock Market News, Investment Ideas, Nifty, BankNifty