Press Release

News,Article,Findoc | December 25
Quality Stocks Hold Key

Source: Business Today

With 2021 just around the corner, here`s a glimpse of what to expect in the new year - in stocks, insurance or gold.

Taking Stock: The Year That Was

The year 2020 could well go down in history as one of the most testing years for the market. Indices were on a roller-coaster ride The Sensex fell 38 per cent from its peak of 41,952.63 on January 14 to a low of 25,981.24 on March 23.

"The market has seen astonishing recovery since the lows hit in March 2020. Unlike previous crashes, which were caused by structural failures, this one was due to something that was unforeseen. Once we as an economy normalised the effects of the pandemic, businesses started functioning at levels observed in the initial days of 2020," says Nikhil Kamath, Co-Founder and Chief Investment Officer (CIO), True Beacon and Zerodha.

"Though technically the economy is in a recession, high-frequency macro indicators have signalled a faster-than-expected recovery. Corporate earnings have surprised for two consecutive quarters supported by management commentary, leading to robust earnings outlook for next two years," says Rajesh Cheruvu, CIO, Validus Wealth.

The Road Ahead

Besides domestic factors, global liquidity is also chasing stocks in emerging markets such as India. The countrys weightage has increased in the MSCI index, a benchmark for major international fund houses. This is likely to keep liquidity high going ahead. "Excess liquidity driven by ultra-easy monetary and fiscal policy, as a response to the pandemic mayhem, is likely to persist at least for a couple of more years," says Cheruvu of Validus Wealth.

While the initial rally was driven by select stocks, it is now more broadbased. "Market breadth that was very narrow two-three quarters ago has now improved to 95 per cent. Even retail participation, which had reached 70 per cent during the lockdown, has now moved down to 60 per cent closer to long-term average of 55 per cent. Rising institutional participation would control speculative behavior, thereby lending long-term confidence to market participants," adds Cheruvu.

In a nutshell, the market appears set for an average year in 2021. "Despite the fact that stocks are trading at all-time highs, we believe the Nifty can generate returns of 10-12 per cent from the current levels by the end of 2021. We also believe that the broader market will outperform the Nifty in 2021," says Jyoti Roy, DVP, Equity Strategist, Angel Broking.

However, the possibility of a downside does exist. "We expect some sort of consolidation or correction in the medium term. On the upside, markets can rally to 14,000-14,200 only if supported by economic data over the next few quarters. On the downside, 10,800-11,000 is possible given that markets are trading at a record P/E of 36, which is not sustainable. Even the average P/E of the markets is currently 21-22, so it is better to hedge your position or book profits right now," says Hemant Sood, MD, Findoc Group.

Quality stocks hold the key in 2021. "We expect 2021 to be a year of `rally in stocks` and not `rally in the markets`... it would be more of a `stock-picker`s` market," says Rupen Rajguru, Head, Equity Investment & Strategy, Julius Baer India.

Sectors To Look Out For

"While we expect sectors with strong revenue visibility such as IT and pharma to do well in 2021, cyclical sectors like auto, cement and consumer durables, will also fare well, given the strong economic rebound," says Roy of Angel Broking. "Rural-focussed sectors such as agrochemicals, two-wheelers and tractors should also continue to do well on the back of a buoyant farm sector," he adds.

The BFSI sector, hit hard by the post-Covid plunge, is expected to recover. "Indian private banks now have the best-ever capital and liquidity position in history? we also like insurance as a good structural theme," says Rajguru of Julius Baer India.

Private banks with high-quality assets will be good bets. "They will perform well as credit growth comes back with economic recovery," says Cheruvu of Validus Wealth.

PSUs are likely to improve their returns as well. "A lot of PSUs are trading closer to their book value and have decent returns on equity (ROEs) and dividend yields, and hence make for a good investment case," says Rajguru of Julius Baer India.

There will also be scope for select good picks in infrastructure "We are positive on the cement," says Roy of Angel Broking.

img
img
img
img
img
img

Important Message The information contained in this file is provided for informational purposes only, and should not be construed as legal advice on any matter. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this file to the fullest extent permitted by law. Every effort is made to avoid errors. In spite of that, errors and discrepancies may creep in. It is expressly stated that neither Findoc Investmart Private Limited nor any of the contributors of updates will be responsible for any damage to anybody on the basis of this document. Readers are, therefore, requested to cross check with the original sources e.g. Government publications, Orders, Judgments etc., before taking any action or making any decision. These services are being provided through our group companies Findoc Capital Mart Pvt Ltd and Findoc Finvest Private Limited

Attention Investors
  • 1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
  • 2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
  • 3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
  • 4. Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries forrefund as the money remains in investor's account."
Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactionsin your demat account directly from NSDLon thesame day.....issued in the interest of investors."
KYC is a one-time exercise while dealing in securities markets-once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary." | (As instructed by SEBI, We hereby declare that we do engage in proprietary trading in all segment across the exchange.)
Effective communication & Speedy redressal of the grievances a. Register on SCORES portal b. Mandatory details for filing complaints on SCORES: i. Name, PAN, Address, Mobile Number, Email ID c. Benefits: i. Effective communication ii. Speedy redressal of the grievances link: https://scores.gov.in/scores/Welcome.html

FINDOC INVESTMART PVT. LTD./FINDOC FINVEST PVT LTD.

Registered Office :

SCO 210-211, Sector 34-A Chandigarh-160022

Corporate Office :

4th Floor, Kartar Bhawan, Near PAU Gate No.1, Ferozepur Road Ludhiana -141001.