The Indian stock market faces mixed signals with optimism from GST reforms and S&P upgrades, while challenges arise from tariffs and weak earnings. Experts suggest focusing on value stocks like PSU banks, infrastructure, and energy for long-term gains amid market volatility.
Stocks to buy for the long term: The Indian stock market is caught between headwinds and tailwinds. Proposed GST reforms, the S&P upgrade, and positive geopolitical developments are driving optimism. On the other hand, stretched valuations, the looming risk of Trump's tariffs, and weak earnings present challenges that cannot be ignored.
Market benchmarks, the Sensex and the Nifty 50, have been in the green since August 13 and look set to extend their winning streak to the fifth consecutive session on Wednesday, August 20.
The Sensex and the Nifty were both up by 0.30 per cent around 2 PM.
However, experts believe the domestic market may not be able to sustain gains as the August 27th deadline for the 25 per cent secondary tariff on India approaches.
"US President Donald Trump's tariff policy, totally devoid of logic and fairness, and driven solely by personal likes and dislikes, may continue. This will have negative implications for India in the short-term, and the market will have to discount that, too," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Considering the persisting uncertainty, it makes sense to shift focus to value stocks at this juncture, and some experts agree with this notion.
Prashanth Tapse, research analyst and senior VP of research at Mehta Equities, believes it is a good time to gradually shift focus towards value stocks in India. These sectors are gaining traction due to government-led reforms, increasing capex, friendly interest rates, and strong cash flows while still trading at reasonable long-term attractive valuations.
"Investors may particularly consider value-oriented sectors such as PSU banks, infrastructure, energy, FMCG, and capital goods, which are well positioned to benefit from the ongoing economic rise and offer healthy long-term visibility," said Tapse.
Vinit Bolinjkar, the head of research at Ventura, said while shifting from growth stocks to value stocks might seem like a safe bet during uncertain times, it's important not to overlook strong domestic growth stories.
"Certain sectors, especially those with robust domestic demand and stable earnings, can still offer significant opportunities for growth despite the broader market volatility," said Bolinjkar.
Stocks to buy: Top high-earnings- value stocks for the long term
1. Anthem Bioscience
Strong double-digit revenue and profit growth, best-in-class margins, and industry-leading ROE/ROCE signal operational strength and efficiency.
After listing, it commands a higher valuation (nearly 71+ times PE) than peers, but it justifies this by its integrated capabilities, scale, and capital-light model.
Anthem Bioscience's high price movement reflects investor confidence in its integrated CRDMO platform, leading fermentation capacity, and differentiated offerings in both small molecule and large molecule domains.
"Buy on dips with a target of ₹1,000+ for a 9 to 12-month investment period," said Tapse.
2. Bharat Electronics (BEL)
BEL remains a compelling long-term value proposition, with consistent and accelerating earnings growth, strong defence-sector growth, and a strong order book of around ₹71,000 crore, which ensures sustained revenue visibility.
"Buy on dips with a target of ₹500+ for a 12-18 months investment period," said Tapse.
3. Bharti Airtel
Bharti Airtel stands out as a value-at-a-reasonable-price opportunity. It has doubled earnings, driven by the 5G rollout and expanding digital services and supported by industry-leading ARPU enhancements along with solid subscriber gains.
Despite commanding a reasonable premium valuation, its superior return ratios and monetisation strength suggest the valuation is justified for investors who prioritise growth and profitability.
"Buy on dips with a target of ₹2,400+ for a 12-month investment period," said Tapse.
4. Dr. Reddy's Laboratories
Dr. Reddy's Laboratories' earnings have grown at about 23 per cent CAGR over five years, yet it trades at only nearly 19.9 times PE compared to nearly 30 times industry peers—making it an earnings-rich value pick.
"Buy on dips with a target of ₹1,520+ for 12 12-month investment period," said Tapse.
5. State Bank of India (SBI)
A PSU banking giant with strong fundamentals and one of the most reasonable valuations in the large-cap universe, SBI combines stable earnings growth, improving asset quality, and a modest valuation compared to peers to make it a compelling large-cap value pick in the banking space, especially attractive for long-term investors seeking both growth consistency and valuation discipline.
"Buy on dips with a target of ₹1,000+ for a 12 to 18-month investment period," said Tapse.
6. Vedanta
Vedanta is a diversified metals and mining company with strong RoE and RoCE (nearly 24–25 per cent), a modest five-year sales growth (nearly 9.3 per cent), and yet a reasonable P/E near 15 times—far below peers.
"Buy on dips with a target of ₹540+ for a 12-month investment period," said Tapse.
7. Hindalco Industries
Hindalco's net profit grew nearly 40 per cent CAGR over the last three years, and net sales increased nearly 18 per cent CAGR.
"It trades attractively on valuation metrics (PE nearly 14.3 times versus industry 21 times; P/BV nearly 1.4 times versus industry 3.7 times). Buy on dips with a target of ₹820+ for a 12-month investment period," said Tapse.
8. Tata Motors
Tata Motors offers a strong investment case backed by its leadership in EV adoption in India, growing global presence through Jaguar Land Rover, and a solid product pipeline.
"Trading at reasonable valuations, it provides a balance of growth and value for long-term investors. Buy on dips with a target of ₹920+ for a 12-month investment period," said Tapse.
9. Mishra Dhatu Nigam (Midhani)
A niche PSU with a monopoly in speciality metals and alloys, critical for defence, space, and aerospace applications. Strong government focus on defence indigenisation and rising demand for advanced materials provide multi-year growth visibility.
"With a healthy order book, improving margins, and a debt-free status, Midhani offers long-term value. Buy on dips with a target of ₹520+ for a 12-month investment period," said Tapse.
10. ITC
ITC is a diversified conglomerate (FMCG, agribusiness, paper) featuring high ROCE (nearly 38 per cent), steady dividend yield (nearly 3 per cent), and trading at value-friendly multiples.
"Buy on dips with a target of ₹535+ for 12 12-month investment period," said Tapse.
Bolinjkar recommended 10 high-earnings-growth stocks to buy for the long term:
3. ICICI Bank
5. Laurus Labs
8. Samhi Hotels
10. Adani Power