Top largecap, midcap stock picks for Diwali 2020 by HDFC Securities

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India still is not out of woods as far as the Covid pandemic is concerned or its impact on macro or micro is concerned– though latest macro and micro data are encouraging. Going by the Q2 results, financials have shown signs of overcoming the issues caused by covid-19 by growing collection efficiency, adequate provisioning, and the fresh capital cushion lent to balance sheets. “All in all after a turbulent past year, we can look forward to a relatively sedate but selectively rewarding year, says HDFC Securities.

Analysts believe, diversification is the key in the new Samvat. “Investors need to look at asset class diversification, sector diversification, spreading investments over time (by way of SIP or staggered investments). Also going by the way global investing has picked pace, MNIs and HNIs need to look at this asset class to check whether this suits their risk profile and skill sets,” says the brokerage.

HDFC Securities’ sector commentary

Sectorally, PSU index has a fair chance of coming back in favour, but for that the majority shareholder will have to take repeated steps to protect and grow market cap of PSU stocks. Banks seem to be headed higher but with intermittent corrections. Metals could be a surprise performer. Automobiles could take some more time to make a sustainable bottom. FMCG and Oil & Gas could underperform. IT and healthcare have some more upside, but repeating 2020’s performance will be difficult for them.

Top Diwali stock picks

HDFC Securities has selected 10 top stocks — five largecaps and five midcaps for investors, where the brokerage sees potential to generate good returns for investors by next Diwali.

Stock, Add on dips, Target price, Upside

Large cap stocks

Bharti Airtel 400-403, 597, 33%

Cadila Healthcare 385-393, 508, 18%

ICICI Bank 395-405, 503, 14%

Infosys 1002-1006, 1205, 8%

United Spirits 441-451, 645, 19%

Mid cap stocks

Alembic Pharma 877-885, 1148, 17%

Credit Access Grameen 520-540, 797, 18%

Gujarat Gas 270-273, 356, 14%

Mphasis 1234-1238, 1,511, 13%

Radico Khaitan 380-390, 545, 26%

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