Trideep Bhattacharya, senior portfolio manager -Alternate Equities at Axis AMC, expects 2021 to be a transition year - from a PE expansion rally in 2020 to an estimate driven rally in 2021.
He said, "We expect 2021 to be a transition year. Last year we saw the virus affecting the economies, this year it is all about vaccine and from lockdown to reopening and from recession to recovery. From a market standpoint we see a transition from a PE expansion driven rally in 2020 to an estimate driven rally in 2021."
"So, the big call is to understand where the earnings upgrades are going to happen and be there before it. So we see earnings upgrade driving the rally."
Bhattacharya advised investors to focus on cyclical stocks with pricing power. He said, "At Axis AMC, we are focusing on cyclical stocks where we see pricing power. Not only do they benefit from cyclical upturn in the economy but in case the commodity prices kind of raise its hood, these companies can pass it on to their customers without affecting demand too much."
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