New Delhi, April 3 -- The Indian banking and financial services (BFSI) sector is poised for a gradual recovery after a challenging FY26, with improving earnings visibility and structural tailwinds expected to drive medium-term performance, according to a recent report by Motilal Oswal Financial Services (MOSL).

The report characterizes FY26 as a "challenging year for investing," noting that macro volatility, margin pressures and weak loan growth weighed on sectoral performance."

However, it also highlights and stated that 21 stocks within their BFSI coverage universe delivered more than 25% returns, underscoring the importance of stock selection and the breadth of opportunities within the sector.

Despite near-term headwinds, the sector...