It is a tradition amongst local brokerage houses, which primarily cater to the domestic household clients, to present a list of their top stock ideas to their clients on every Diwali. The ideas are presented usually with one year investment period, i.e. till next Diwali.
Reading through the presentations of various brokerages this
year, I found the following key messages:
Kotak Securities
As we advance towards getting the vaccine (by middle of next
year) and economy gets back to normalcy, we can expect the economy driven
sectors to outperform the defensives in Samvat 2077. Banks, NBFCs, automobiles,
oil & gas, telecom, utilities, capital goods, cement and metals could come
into focus in Samvat 2077. The potential upside in most of these sectors based
on our one year price targets ranges between 20 & 39% (Vs single digit potential
upside in Nifty50). Since most of the economy driven sectors are prone to
market correction one should have an accumulation strategy in them rather than
investing at one go.
ICICI Direct
Given the scenario, we see value emerging across the market cap
spectrum with the key filter being quality. We continue to advise investors to
utilise equities as a key asset class for long term wealth generation by
investing into quality companies with strong earnings growth and visibility,
stable cash flows, RoE and RoCE.
Motilal Oswal Securities (Retail)
As we enter Samvat 2077, the markets have seen a complete
recovery from the Covid lows. We expect Nifty EPS growth of 4% in FY21 while
expecting a sharp rebound in FY22. Thus, the overall structure of the market
remains positive. At 18x FY22 earnings, Nifty valuations is also not very
expensive as it is trading closer to its long-period averages. With the
economic activity recovering fast, more earnings upgrade cannot be ruled out.
Further strong global markets can keep the liquidity abundant in the system,
thus providing support to the overall market. However, intermittent corrections
cannot be ruled out as there is a risk of second wave of Covid-19 and thus
sustenance of economic recovery holds the key. From next 12 months perspective,
we are positive on IT, Healthcare, Rural-Agri, Telecom, Consumer along with
select Financials. We believe another round of fiscal stimulus could help
elevate sentiment further.
HDFC Securities
India still is not out of woods as far as the Covid pandemic is
concerned or its impact on macro or micro is concerned – though latest macro
and micro data are encouraging.
In the new Samvat, investors need to look at asset class
diversification, sector diversification, spreading investments over time (by
way of SIP or staggered investments). Also going by the way Global investing
has picked pace, MNIs and HNIs need to look at this asset class to check
whether this suits their risk profile and skillsets.
All in all after a turbulent past year, we can look forward to a
relatively sedate but selectively rewarding year.
Sharekhan (BNP PARIBAS)
Stepping into Samvat 2077, the threat of the pandemic is not
over yet and the fear of a second wave in big geographies is a potential risk.
Further, the overhang of US election outcome will keep equity market on its
toes.
For Samvat 2077, we have hand-picked 12 quality stocks to create
a portfolio, which is a mix of both large-caps and quality mid-caps. All the 12
companies in the portfolio have all the ingredients to outperform the broader
market indices over the next 12 months and at the same time withstand
volatility and emerge stronger.
SMC Global
It is an opportune time for the investors to tweak and tighten
portfolio for the next Bull Run, by embracing buy on dips strategy in frontline
quality stocks. Quality stocks with structural story will be the right recipe
for a good investment and wealth creation.
Reliance Securities
In Samvat 2077 we recommend the investors
to focus on sectors, which are considered to be defensive or prone to prolonged
economy slowdown. Further, the companies having sound execution expertise,
brand equity, quality management, lean balance sheet with consistent cash flow
generation, sound corporate governance, healthy return ratio and better margin
of safety are likely to deliver better alpha for the investors.
Axis Securities
Our themes for Samvat 2077 are:
·
The small and midcaps are picking up steam and
they should deliver solid returns in 2021 as economic uncertainties will reduce
and volatility will decline.
·
Housing and banking will be major themes to
watch out for in 2021 because of correction in real estate prices and lower
interest rate regime.
·
Digital and telecommunications will continue to
remain major long term structural themes.
·
Growth is now a more certain theme, but growth
at a reasonable price will be an even bigger theme to invest which will deliver
solid returns over the next one year.
Yes Securities
The year 2020 is largely about survival, both health‐wise and finance‐wise. It is also an
opportune time to tweak and tighten your portfolio for the next bull run.
Vikram Samvat 2077 could well be akin to the year 2003, from a market
standpoint.
As is evident from the above cited views of various brokerages,
the consensus view is generally buoyant, with a few words of caution here and
there. There appears to be a consensus that growth will pick up in 2021.
However, there are strong differences about the ideas that may
work in next 12 months. Brokerages like Kotak are advising investors to
accumulate cyclical; HDFC, ICICI and Reliance etc are suggesting investors to
focus on high quality defensives; while Motilal is advising a diversified
portfolio of sectors that worked in 2020, e.g., IT, healthcare, rural/agri an
select financials etc.
Some like Axis Securities are forecasting strong midcap
outperformance; and some like ICICI Direct are advising focusing on quality
large caps; most other have suggested a multicap strategy with a judicious mix
of large and small cap.
One striking feature is the disconnect between the broader view
and the suggested stock ideas. For example, Axis Securities is bullish on
Housing, but the list of recommended stocks does not include any real estate
company.
Bharti Airtel, HCL tech, L&T, ICICI Bank, are some of the
most common ideas in the list of stocks presented by most brokerages.
