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The past year was a challenging one for the Indian equity market, as it underperformed global and emerging markets for the first time since the Covid-19 era. Yet, analysts at Axis Securities believe that most of the significant events are behind us, and the majority of the negatives are already factored into the price.

The brokerage maintained its base case Nifty target at 28,100 for December 2026 by valuing the index at 20x on Dec’27 earnings. Earnings upgrade starting Q3FY26 onwards remains an upside risk to the target.

Its bullish outlook on the index stems from a robust macro setup, as it believes it serves "as a stable haven amidst global economic volatility".

"We remain confident in India’s long-term growth story, supported by its favourable economic structure, rising capex, and the consumption boost from the recent Union Budget and GST 2.0 reforms, driving credit growth for banks. This is expected to support double-digit earnings growth, ensuring that Indian equities can deliver strong double-digit returns over the next 2-3 years," it opined.

Among the top stocks to buy, Axis Securities recommended HDFC Bank, Bajaj Finance, Bharti Airtel, Avenue Supermarts, State Bank of India, Max Healthcare, Kirloskar Brothers, Kalpataru Projects, APL Apollo Tubes, Mahanagar Gas, Inox Wind, Prestige Estates, Ujjivan Small Finance Bank, Chalet Hotels, and Sansera Engineering for up to 54% returns.

Here's the rationale behind the brokerage's bullish view on these stocks:

Axis Securities expects Bajaj Finance to continue its growth trajectory, reporting a consistent ~24–25% CAGR AUM growth over the medium term, with growth resuming from FY27 onwards, on contribution from the core existing products and a further push from the scale-up of the new products.

The blue-chip stock is expected to deliver a strong AUM/NII/earnings growth of 25/25/24% CAGR over FY27–28E, driven by steady NIMs, operating leverage driving cost ratio improvement, and downward-trending credit costs backed by asset quality improvement.

It further expects Bajaj Finance to deliver a RoA/RoE of 4.4–4.5% / 19–22% over FY26–28E, broadly in line with the management’s long-term guidance.

SBI’s performance has been the best amongst the larger banks, and the bank remains well-poised to sustain its performance, supported by the management’s focus on deepening its liability franchise, allocating capital to higher RoRWA assets, maintaining a disciplined pricing approach, and leveraging technology to drive operating efficiency, opined Axis Securities.

The outperformance on NIMs in Q2, with the trend reversing earlier than expected, provides a cushion to the bank’s 1% RoA delivery. "Barring the one-time impact of the stake sale in Yes Bank, SBI’s RoA has remained at 1%+. The bank is making concentrated efforts to contain Opex growth by focusing on improving productivity and maintaining the C-I ratio," it added.

HDFC Bank has been consistently performing on its guidance in its endeavour to revert to its pre-merger levels across metrics, and its execution capabilities remain strong, said Axis Securities.

With LDR at a