Bull run or flat returns in 2021? ICICI Securities’ top 19 stock picks for 2021

Indian equities have entered a bull market environment. Analysts expect Nifty to reach new levels if the bull run continues. However, if markets revert to average sentiment, investors might end up making flat returns for 2021. “Indian equities have entered a bull market environment as evidenced by the one year rolled forward P/E at 22x rising beyond the peak of FY08 at ~20x on an ‘ex-ante basis’ and significant broadening of the market rally by market cap size and various investment styles (Dividend yield, PSUs, High Beta, Small caps etc),” says ICICI Securities.

“The bull market environment prevailing in CY21 could take Nifty50 to 14,900 levels. However, if market bullishness reverts to average sentiment, the base case fundamental value is ~13,500, which indicates flat returns for CY21. If a risk-off environment materialises, we expect NIFTY50 to touch 11,600 on the downside,” adds the brokerage.

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The brokerage sshares its top picks for 2021 — SBI Life, ICICI Lombard, Axis Bank, HDFC Bank, NTPC, Cipla, Bharti Airtel, Ultratech, Infosys, Dabur, Bajaj Auto; Midcaps – GGL, Balkrishna, Alkem, Astral Polytechnik, Akzo Nobel; Small Caps – Greenpanel, Heritage foods, Bajaj Consumer.

SBI Life: SBI Life has a market share of 7.2% in total new business premium (NBP) during H1FY21 V/s 6.2% in H1FY20 & 24.5% market share in private sector NBP during H1FY21 V/s 21.8% in H1FY20. The company’s gross premium grew by 22% in H1 FY21 V/s H1 FY20 to 20,730 crore. It is a leading private life insurance company in India has a healthy solvency ratio of 2.45 against regulatory mandate of 1.50, low surrender ratio of 2.7% in H1FY21 and improving persistency ratio of 85.9% in the 13th month.

Bharti Airtel: Bharti Airtel has jumped 25% up in the last two months. Robust earnings for the September quarter and a jump in the subscriber base aided the telecom operator’s stock prices to soar. Analysts are bullish on the stock and recommend a ‘Buy’ rating to the share. CLSA sees a target price of 715 for Bharti Airtel stock. Motilal Oswal has set a target price of 650. Axis Securities has kept the target price at 657. ICICI Securities has set a target price of 700.

Infosys: The IT major recorded a growth of 3.2% in its revenues y/y on reported basis and 2.2% on constant currency, in Q2FY21, driven by strong growth in digital portfolio. Management has revised revenue guidance upwards for FY21 from 0–2% to 2–3% y/y growth in constant currency. Also, operating margin guidance increased from 21–23% to 23 –24% for FY21.

The brokerage believe second wave of COVID-19 poses near term challenges for the economy as well as for the stock markets even as hopes of vaccine turn into reality. India continues to witness a steady decline in daily new coronavirus cases as 23,950 new COVID-19 cases were reported in last 24 hours taking the total count to 1,00,99,066.

The total recoveries have gone up to 96,63,382 with 26,895 new recoveries recorded on Wednesday.

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