Diwali Fundamental Stock Picks 2026: 10 Stocks to Watch

Diwali is traditionally associated with new beginnings, and for many investors, the festive season is also a time to review their financial goals and investment portfolios. Muhurat Trading, the special trading session conducted by Indian stock exchanges around Diwali, adds another layer of significance to this period.

For investors looking to explore stock market opportunities during Samvat 2083, understanding the companies, sectors and business developments that could influence future performance is an important starting point.

JM Financial Services' Fundamental Research team has identified 10 stocks across different sectors for its Diwali Picks 2026 report dated 29 October 2026. The selection covers companies operating in banking, defence, power transmission, telecom equipment, recycling, pharmaceuticals, digital platforms, telecom services, infrastructure and steel.

Diwali Stock Picks 2026: Overview

The following table summarises the 10 stocks covered in the JMFS research report. The closing market prices (CMP) are as of 28 October 2026.

Company	Sector	CMP (₹)	Target Price (₹)	Research Upside
ICICI Bank	Banking	1,374	1,710	24%
Bharat Electronics Ltd	Defence	364	485	33%
Power Grid	Power Transmission	251	290	15%
Sterlite Technologies	Telecom Equipment	879	1,020	16%
Gravita India	Metals & Recycling	1,343	1,800	34%
Emcure Pharmaceuticals	Pharmaceuticals	1,873	2,362	26%
Eternal	New-age Business	327	400	22%
Bharti Airtel	Telecom	1,950	2,400	23%
Larsen & Toubro	Capital Goods & EPC	3,805	4,615	21%
Tata Steel	Metals & Steel	169	195	15%

Source: JMFS Fundamental Research, dated 29 October 2026. CMP as of 28 October 2026. Research target prices and upside estimates are not assured returns.

1. ICICI Bank: Banking Growth Supported by Strong Business Fundamentals

ICICI Bank continues to demonstrate a strong banking franchise, supported by corporate banking, business banking and healthy non-interest income. Its ability to maintain asset quality while expanding its lending operations remains an important part of its growth outlook.

During Q2FY27, the bank reported loan and deposit growth of 30% and 27% year-on-year, respectively. Even after excluding the impact of FCNR(B) mobilisation, underlying loan growth remained healthy at approximately 24%.

The bank's management expects loan and deposit CAGR of around 21% and 19%, respectively, over FY26–FY28. Its healthy fee income and relatively low exposure to lower-rated advances also support its operating profile.

Key factors to watch:

• Continued growth in corporate and business banking.
• Healthy loan and deposit expansion.
• Asset quality and credit-cost trends.
• Improvement in net interest margins as surplus liquidity gets deployed.

Research outlook: JMFS has a target price of ₹1,710 against a CMP of ₹1,374, indicating an estimated upside of 24%.

Key risk: Margin compression due to an adverse asset mix or slower-than-expected business growth.

2. Bharat Electronics Ltd: Defence Indigenisation and a Strong Order Pipeline

India's growing focus on domestic defence manufacturing has created opportunities for companies involved in defence electronics, radar systems and advanced military technologies. Bharat Electronics Limited (BEL) is among the key companies operating in this space.

BEL has a reported order backlog of approximately ₹72,258 crore, equivalent to around 2.6 times its FY26 revenue. The company is also targeting order inflows of more than ₹55,000 crore in FY27, providing visibility into its potential business pipeline.

Its exposure to strategic defence programmes, including QRSAM, LCA, radar systems, electronic warfare and next-generation platforms, adds to its long-term business opportunities.

Key factors to watch:

• Execution of its large order backlog.
• New defence programme approvals and order inflows.
• Export opportunities and technology development.
• Maintaining operating margins amid changes in product mix.

Research outlook: JMFS has a target price of ₹485 against a CMP of ₹364, indicating an estimated upside of 33%.

Key risks: Delays in programme approvals, slower order conversion, margin pressure and dependence on government defence procurement.

3. Power Grid: Opportunities from India's Expanding Power Infrastructure

The expansion of renewable energy capacity, growing electricity demand and investments in transmission infrastructure are increasing the importance of India's power transmission network.

Power Grid Corporation of India plays a significant role in this ecosystem. Its regulated business model provides earnings visibility, while investments in transmission infrastructure could support future business growth.

For FY27, the company has outlined capital expenditure of approximately ₹37,000 crore and capitalisation targets of around ₹30,000 crore. It also has a substantial work-in-hand backlog of approximately ₹1.75 lakh crore, alongside active tenders worth ₹73,400 crore.

The Green Energy Corridor Phase III scheme, valued at approximately ₹1,86,405 crore, is another important opportunity for transmission infrastructure companies.

Key factors to watch:

• Execution of planned capital expenditure.
• Growth in regulated asset base.
• New transmission project wins.
• Investments in renewable energy transmission and storage infrastructure.

Research outlook: JMFS has a target price of ₹290 against a CMP of ₹251, indicating an estimated upside of 15%.

Key risks: Lower-than-expected capitalisation, reduced project wins and aggressive competition in transmission bidding.

4. Sterlite Technologies: AI Data Centres and Telecom Infrastructure Demand

The growing adoption of artificial intelligence, cloud computing and digital services is increasing the demand for data centres and high-capacity connectivity infrastructure.

Sterlite Technologies (STL) is positioned in this space through its optical networking and telecom infrastructure business.

The company's growth outlook is supported by a reported order backlog of ₹35,274 crore. This includes a multi-year hyperscaler order and a major AI data centre contract, alongside domestic telecom orders.

Key factors to watch:

• Execution of hyperscaler and AI data centre contracts.
• Demand for optical fibre and telecom infrastructure.
• Improvement in EBITDA margins.
• Growth in international and domestic orders.

Research outlook: JMFS has a target price of ₹1,020 against a CMP of ₹879, indicating an estimated upside of 16%.

Key risks: Raw material availability, lower-than-expected hyperscaler capital expenditure, trade barriers and reduced telecom infrastructure spending.

5. Gravita India: Recycling and the Growing Circular Economy

As businesses and governments increasingly focus on resource efficiency and sustainable manufacturing, organised recycling companies could have an important role in the circular economy.

Gravita India operates across multiple recycling segments, including lead, copper, aluminium, plastics and rubber.

The company has been expanding its core lead recycling capacity and has entered copper recycling through its acquisition of Rashtriya Metal.

Key factors to watch:

• Expansion of lead recycling capacity.
• Growth in copper and other non-lead recycling segments.
• Share of value-added products in the business.
• Improvement in operational efficiency and profitability.

Research outlook: JMFS has a target price of ₹1,800 against a CMP of ₹1,343, indicating an estimated upside of 34%.

Key risks: Availability of scrap materials, restrictions from key sourcing countries, faster EV adoption and backward integration by battery manufacturers.

6. Emcure Pharmaceuticals: Growth Across Domestic and International Markets

Emcure Pharmaceuticals is another company included in the Diwali Picks 2026 list. Its business outlook is supported by growth in domestic chronic therapies, international markets and complex generic products.

In India, the company is focusing on higher-margin therapeutic areas such as cardiology, central nervous system (CNS) and women's health.

Its international business has also reported growth, with Europe and Canada recording expansions of 33% and 25%, respectively, as highlighted in the research report.

The company received 15 product approvals across key global markets in Q1FY27. Its product pipeline, complex generics capabilities and international partnerships could provide additional growth opportunities.

Key factors to watch:

• Growth in chronic therapy portfolios.
• International business expansion.
• New product approvals and complex generic launches.

Research outlook: JMFS has a target price of ₹2,362 against a CMP of ₹1,873, indicating an estimated upside of 26%.

Key risks: Competition in generic and biosimilar products, supply-chain challenges, foreign exchange fluctuations and geopolitical uncertainty.

7. Eternal: Growth Opportunities in Food Delivery and Quick Commerce

Eternal operates several consumer-facing digital platforms, including Zomato, Blinkit, District and Hyperpure.

Its food delivery business provides an established operating base, while Blinkit is an important growth driver in the quick-commerce segment.

Blinkit's strategy is expanding beyond grocery delivery towards a broader product assortment, including electronics and appliances. Its dark-store network, supply chain and increasing product selection could help strengthen its competitive position.

The food delivery business also reported net order value growth of 21.5% year-on-year in Q2FY27, supported by customer growth, order frequency and monetisation.

Key factors to watch:

• Blinkit's store expansion and operational efficiency.
• Growth in quick-commerce order value.
• Food delivery order frequency and monetisation.
• Progress towards sustainable profitability.

Research outlook: JMFS has a target price of ₹400 against a CMP of ₹327, indicating an estimated upside of 22%.

Key risks: Increasing competition, technology disruptions, data security concerns and regulatory uncertainty.

8. Bharti Airtel: Tariff Improvements and Lower Capital Expenditure

Bharti Airtel has an established presence in mobile services, home broadband, enterprise solutions, DTH and international telecom markets.

The company's premiumisation strategy has helped it maintain a relatively strong average revenue per user (ARPU) compared with industry peers. Its reported ARPU stood at approximately ₹264.

One of the important factors supporting its business outlook is the potential improvement in telecom tariffs. The research report estimates that India's wireless ARPU could grow at around 12% CAGR over FY25–FY28.

Key factors to watch:

• Telecom tariff movements and ARPU growth.
• 5G monetisation and customer premiumisation.
• Growth in enterprise and broadband businesses.

Research outlook: JMFS has a target price of ₹2,400 against a CMP of ₹1,950, indicating an estimated upside of 23%.

Key risks: Delays in tariff hikes, competitive pricing, regulatory costs and currency depreciation in international operations.

9. Larsen & Toubro: Infrastructure and Engineering Order Book

Larsen & Toubro (L&T) is one of India's largest engineering and construction companies, with operations across infrastructure, energy, defence, heavy engineering, manufacturing and services.

The company's diversified business presence and large order book provide visibility into its future execution pipeline.

During Q2FY27, L&T reported order inflows of approximately ₹1.48 lakh crore. Its total order book stood at around ₹8.54 lakh crore, providing multi-year execution opportunities.

A further opportunity lies in the estimated ₹10.3 lakh crore project pipeline for H2FY27 across infrastructure, conventional and renewable energy, and manufacturing.

Key factors to watch:

• Conversion of the project pipeline into new orders.
• Execution of the existing order book.
• Domestic and international infrastructure spending.

Research outlook: JMFS has a target price of ₹4,615 against a CMP of ₹3,805, indicating an estimated upside of 21%.

Key risks: Geopolitical developments in West Asia, execution delays, cost overruns and additional provisions in certain projects.

10. Tata Steel: Improving Steel Demand and Operating Margins

Tata Steel is included in the Diwali Picks 2026 list on the back of improving prospects for its Indian operations and a potentially better operating environment in international markets.

The research outlook factors in recent domestic steel price increases and safeguard duties, which could support the profitability of the Indian business.

JMFS expects EBITDA and profit after tax CAGR of 17% and 30%, respectively, over FY26–FY29E, with a gradual improvement in return on equity.

Key factors to watch:

• Domestic steel demand and pricing trends.
• Production volume growth.
• Improvement in European operations.
• Raw material costs, particularly coking coal.

Research outlook: JMFS has a target price of ₹195 against a CMP of ₹169, indicating an estimated upside of 15%.

Key risks: A decline in domestic steel prices, higher coking coal costs and continued losses in European operations.

What Should Investors Evaluate Before Investing in Diwali Stock Picks?

A list of research-backed stocks can help investors identify companies worth studying. However, a research recommendation should not be the only factor behind an investment decision. Before considering any stock, investors should evaluate the following:

1. Understand the company's business

2. Review financial performance

3. Check valuations

4. Identify business and sector risks

5. Match investments with your financial goals