Nifty jumps 100% since March 2020 lows; analysts still see further upside in these stocks
ICICI Direct expects broad-based participation to continue with midcaps and smallcaps leading the gains
The benchmark NSE Nifty index has rallied 100% since March 2020 lows, power by sustained inflows by foreign institutional investors coupled with better-than-expected financial results and liquidity measures taken by the RBI and government to support the ailing economy from Covid-19.
The 50-share index climbed to 15,834 on July 5 from 7,801 on March 24, 2020. As many as 26 stocks in the Nifty pack have managed to outperform the index during the period. With a rally of 405%, Tata Motors emerged as the top gainer in the list. It was followed by JSW Steel (up 357%), Hindalco (up 339%), Tata Steel (up 325%) and Grasim (up 272%).
Market outlook
Going ahead analysts are bullish on the equity market. Gaurav Dua, Head-capital market strategy, Sharekhan by BNP Paribas said, “The strong revival in corporate earnings growth, economic recovery in India and globally along with accommodative monetary and fiscal policy makes a strong case for reasonably good returns over the next 18 to 24 months.”
In an interaction with a business channel, Koch-based investor Porinju Veliyath said that it is going to be a good time in the market. “I do not see any other asset class near to equity investing for wealth creation,” he added.
ICICI Direct has set a target of 17,500 on the Nifty. It believes that the Indian equity market is showing resilience and scaling new highs amid encouraging corporate earnings and strong domestic macroeconomics. The brokerage expects broad-based participation to continue with midcaps and smallcaps leading the gains.
Stock to buy
Dua further added that it is advisable to have a balanced approach at this point in time. This means an investor should diversify portfolio between largecap and midcap, growth and value stocks and defensive and cyclical. “Our conviction ‘Buy’ recommendations are ICICI Bank, Cummins India, SBI, Ultratech, Tata Motors, Godrej Consumer, Infosys in the largecap space. On the other hand, we like Gland Pharma, Polycab, Dalmia Bharat Cement, Sumitomo Chemicals, Max Financial Services, Laurus Labs and SAIL in the midcap and smallcap segment,” he said.
On the other hand, Motilal Oswal Financial Services prefers ICICI Bank, SBI, UltraTech Cement, Divi’s Labs, Hindalco, SBI Cards, Infosys, HCL Tech, Mahindra & Mahindra, Hindustan Unilever and Titan in the largecap space. It also likes Max Financial, Varun Beverages, L&T Technology, Emami, Endurance Tech, JK Cements, ICICI Securities, Indian Hotels, Aditya Birla Fashion and Orient Electric in the midcap and smallcap segments.