Elara Securities has named ICICI Bank a top conviction pick, citing strong growth and stability. Conversely, the firm is cautious on the auto sector, warning that rising raw material and logistics costs could compress profit margins and force price hikes, potentially hurting consumer demand in the coming months.
Elara Securities has issued a mixed outlook for the Indian markets as of October 1, 2026, favoring the private banking sector while highlighting profitability challenges for automobile manufacturers. The brokerage has identified ICICI Bank as its highest-conviction idea among large-cap stocks, citing its fundamental stability.
ICICI Bank Stays in Focus
The brokerage’s bullish stance on ICICI Bank is driven by the lender’s consistent execution and perceived lower risk profile. With the stock trading around ₹1,326—well within its 52-week range of ₹1,187.6 to ₹1,480—the bank remains a point of interest for investors looking for stability in a volatile market environment. The report highlights that large-cap banks, alongside life insurance and power utilities, continue to demonstrate strong fundamentals that may help them navigate current economic uncertainties.
Margin Pressure Clouds Auto Outlook
In contrast to the optimism surrounding banking, Elara Securities has taken a cautious approach toward the auto sector. While festive season demand is expected to provide some support in the near term, the firm is concerned about bottom-line growth. Escalating raw material prices—including steel, aluminum, and crude-linked inputs—combined with logistical challenges, are creating significant cost headwinds for automakers.
These pressures may force companies to raise vehicle prices to protect their profit margins. There is a risk that such hikes could reduce consumer demand over the next two quarters. The brokerage suggests that investors watch whether companies can absorb these higher costs or if they will successfully pass them on to the customer without impacting sales volumes. Ongoing global instability and fluctuations in oil prices add another layer of complexity, making operating margins a key monitorable for the auto sector in the coming months.