But it may not be an easy task to find those handful of names from among the 3,000-odd stocks that are actively traded on BSE. So, as a New Year gift to you, we asked a number of Dalal Street analysts, as part of ETMarkets New Year Survey, to do that job for you.
The analysts have largely picked largecaps, along with a few promising midcap and smallcap names to build a basket for you to pick and choose from, depending on your own judgment and outlook on market behaviour.
These stocks largely belong to the insurance, IT, pharma, chemicals, banking and telecom sectors. Many of these have already seen heavy buying in last one year.
“We are more positive on IT, pharma and chemicals and our top picks are TCS, Biocon and PI Industries which have strong business models to gain from the new demand dynamics,” said Vinod Nair, Head of Research at Geojit Financial Services. “In the growth-oriented sectors like banking and auto, we see opportunities in Bandhan Bank, IDFC First and Tata Motors on lower valuation and structural tailwinds from further reopening of the economy,” he said
IT and pharma sectors are the two biggest beneficiaries of the pandemic, with many stocks from these sectors more than doubling prices from their March lows. With the Covid crisis still far from over, analysts see further upside potential in them.
Bharti Airtel seems to be a consensus favourite, with many analysts naming it as their top pick. The telecom sector is also one of the beneficiaries of the pandemic with users consuming more data. Also, revenue is likely to increase once another round of price hike materialises.
“Bharti Airtel has a high potential to outperform in Calendar 2021. The company has a strong customer base, and is seeing a consistent rise in 4G subscribers and industry-leading Arpu. Further, it has become increasingly clear that Arpus need to increase from here on for the telcos to continue investing in new technologies. Therefore, a rise in Arpu will help profitability for Bharti Airtel. Further, the valuations appear attractive at these levels,” said Ajit Mishra, VP of Research, Religare Broking.
Bharti Airtel shares now trade at Rs 500. Macquarie believes the stock can hit Rs 690 in the next one year.
“Calendar 2020 has been a memorable year amid huge market volatility from low point of 7,000 [on the Nifty] to new all-time highs. Calendar 2021 will see a number of stocks doing well, out of which our top picks are HCL Tech, Bajaj Finance, Motherson Sumi, L&T and Dixon Tech,” said Nirali Shah, Senior Research Analyst, Samco Securities.
Sensex and Nifty surged over 11 per cent in 2020. But, most of their constituents outperformed the index.
For Rusmik Oza, EVP and Head of Fundamental Research at Kotak Securities, the top five stocks to watch as potential outperformers in CY21 would be: SBI (due to extremely cheap valuations – 1.1x FY22 expected Price/BV), Bharti Airtel (due to potential rise in ARPUs and healthy EBITDA generation), SBI Life Insurance (for relative cheaper valuations & healthy RoEs) and ITC (for potential re-rating due to better outlook for the FMCG business).
Other stocks that different brokers recommended are:
CapitalVia: TCS, HDFC Life, M&M, SBI, HUL
Axis Securities: SBI, ICICI Bank, Bharti Airtel, HDFC, Reliance Industries
Equinomics: Bharti Airtel, UPL, ITC, Jyothy Lab, Balmer Lawrie
IDBI Capital: CDSL, Sumitomo Chemicals, Coromandel International, Jubilant Foodworks, HDFC Life
Religare: ICICI Bank, Kansai Nerolac Paints, Sudarshan Chemicals, Bharti Airtel, Britannia Industries
Ventura Securities: L&T, ACC, HCL Tech, GAIL, GSPL, IDFC First Bank and Godrej Consumer
