Here are YES Securities' top 9 stock picks for 2021

Brokerage YES Securities believes that the best for the Indian equity market is yet to come despite more than 15% return in 2020. It says this is an opportune time to tweak and tighten the equity portfolio.

Therefore, it recommended nine stocks which can deliver a double-digit return to investors this calendar year. This includes stocks such as Sobha, Deepak Nitrite, PNC Infratech, TCI Express, CreditAccess Grameen, HDFC Limited, ICICI Bank, Kansai Nerolac and Gillette India.

Barring ICICI Bank (down 0.73%), Credit Access Grameen (down 1.37%), PNC Infratech (down 7.88%) and Gillette India (down 12%), other players in the list had advanced between 3% and 155% last year.

At present, the benchmark equity indices BSE Sensex and NSE Nifty both are hovering at their record high levels despite uncertainties on the macroeconomic front. However, YES Securities in its report on January 7 said, “The worst is over for the stock market. With regards to the Covid crisis, the market assessment is that rural India is largely unaffected, large number of urban cases are restricted to only few cities and the overall case curve is falling.”

“Commentary from Moderna and Pfizer, the leaders in the vaccine race, is highly encouraging. Mobility has improved across the board, suggesting the economy is well poised on the path of recovery,” it added.

The Economist Intelligent Unit also thinks that economies of India and South Korea will be the first to bounce‐back from the Covid-19 pandemic. YES Securities also added that they wouldn’t be surprised to see over 15 per cent nominal GDP growth in FY22, on the back of the low base of FY21.

Commenting on valuations, the brokerage added that they do not appear to be in dangerous territory. Price-to-earnings (P/E) ratio of the benchmark BSE Sensex was hovering at around 33 times ( on January 7) against its 10-year average of 21 times.

However, YES Securities said, “Optically, values may appear high, but when seen in the context of where the cost of capital is, lack of opportunities in other asset classes, they certainly seem reasonable. If earnings play catch‐up, in the two out of the next four years, then valuations will start looking cheap to the present naysayers. The market structure also looks promising, after a long consolidation since 2018, and volatility coming off from elevated levels.”