New year means a fresh start and the chance to set new goals. People, who look forward to setting their investment goals error-free and have a risk-taking appetite may definitely wish to invest in stocks in 2021.
Here’s a list of stocks that may perform well in 2021 in different sectors:
Bhavesh Gandhi, lead analyst – institutional equities, YES Securities expects COVID-led drug tailwinds and pre-stocking to end in H1 CY20.
"2021 could bring the focus on vaccine manufacturing and distribution capabilities, especially if a large 30-40 percent of the population is to be inoculated," he believes.
"We reckon companies like Dr Reddys', Aurobindo, Cadila and Wockardt and Serum. Our top picks are companies with large and fast-growing brands in the domestic market like Torrent Pharma while Aurobindo and Alembic Pharma fit the bill to play the US generics growth especially in injectables and sartans opportunity respectively,” he opines.
Banks and NBFCs
According to Rajiv Mehta, lead analyst – institutional equities, YES Securities, sustained economic recovery, improving income scenario for salaried and business class, instrumental liquidity interventions by RBI and government, and a low-interest rate represents a conducive business backdrop for lenders. Consequently, the rally and recovery in stock prices should continue in 2021.
"We believe HDFC Bank, ICICI Bank, RBL Bank, Mahindra Finance, Repco Home and Spandana could be strong performers of 2021,” Mehta said.
As per Alok Deora, lead analyst, institutional equities, YES Securities, stock performance has been improving post the correction seen in March/April. Most companies have increased the full-year revenue targets post-September quarter results.
Deora’s top picks in this space are PNC Infratech, KNR Constructions and HG Infra.
Going forward into 2021, Himanshu Nayyar, lead analyst – institutional equities, YES Securities expects staples demand to remain steady with some moderation in packaged food and hygiene products demand to be offset by better trends in discretionary FMCG categories especially driven by continued tailwinds in rural FMCG markets and strong traction in winter portfolio.
His top picks in the staples space for 2021 are HUL, Tata Consumer, Marico and Emami.
On the discretionary side, he expects complete normalisation of demand for 4QFY21 for most categories. His top picks for 2021 are Asian Paints, Avenue Sipermarts, United Spirits, Relaxo, Page Industries, Radico, Trent, ABFRL and V-Mart.
Life and general insurance
Prayesh Jain, lead analyst – institutional equities, YES Securities believes the general insurance industry is well-positioned to benefit from the increased focus on product innovation and health awareness driven by the occurrence of pandemics.
ICICI Lombard although remains his preferred play in the sector with its journey towards underwriting profits, strong distribution franchise and balanced product mix.
Jain believes that the AUM growth story remains intact with the benefit of MTM gains more than compensating for the stressed inflows. In addition to that, the debt segment is expected to remain resilient as economic recovery will lead to improved cash flows for India Inc which get invested in debt funds.
NAM remains his top pick in the sector and is positioned well with the change in the brand name, strong retail base, focus on other business avenues and reasonable valuations. CAMS, a proxy play on the AMC story, is his top mid cap pick in the non-lending financial space.
Kunal Shah, analyst – institutional equities, YES Securities expects profitability for the sector to have peaked out in Q2FY21E as he believes the industry to witness pricing pressure and a pinch of higher input costs from 2021 onwards.
He expects stocks like Birla Corp and Sagar Cements in small caps to outperform as they commission their capacities in 2021 and in large cap, he expects UltraTech Cement may post its recent capex announcement.
In defense sector, Umesh Raut, analyst – institutional equities, YES Securities see margin uptick potential from core defense products due to efficiencies developed over years.
His top picks are Bharat Electronics and Mazagon Dock, while the key rerating catalysts for Hindustan Aeronautics/Bharat Dynamics /Cochin Shipyard would be the realization of guided order inflows, steady margins and strong growth capital generation.
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(Edited by : Jomy)
First Published: IST