NEW DELHI: India’s stock markets have been on a roll over the past few months, the pandemic and
its impact on the economy notwithstanding, and most analysts and brokerages seem to believe this will continue going forward into 2021.
“As we enter 2021, the markets is sitting at all-time high and showing resilience due to abundant liquidity, positive developments on the vaccine front, and signs of economic recovery. More importantly, Covid-19 cases have seen a meaningful decline. Improved corporate earnings have also buoyed the market sentiments. We expect Nifty EPS growth of 6.9 per cent in FY21 while expecting a sharp rebound of 36.2 per cent in FY22,” Motilal Oswal said in a recent report.
Certain sectors have been assigned a positive outlook by most analysts, including IT, BFSI, Healthcare, Auto, and Consumer. Indian IT firms have seen strong business growth on the back of Covid-led digitization and analysts expect the momentum to continue. While valuations are already pretty high and the overall index may underperform, analysts say select IT firms which secure major transformation deals are likely to offer good prospects.
The financial sector is also expected to provide significant upsides. Most brokerages see the segment drawing strength from economic recovery and while risks from Covid-related NPAs exist for banks, non-lending financials would continue to see fast-paced changes that offer scope for good picks. Similarly, the automobile sector is also set to benefit from robust demand recovery.