Hem Securities' top picks for 2022, says COVID-19 can't deflect economic activity pickup

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Hem Securities expects the Indian market to be on a strong footing backed by post-COVID-19 economic growth. The market still has the potential to surprise positively as the macroeconomic construct and earnings remain largely supportive, said the brokerage.

The brokerage’s most favourite themes for the coming year are EVs, defence, IT, renewables, manufacturing, infrastructure and real estate. Hem Securities has shared 16 stock picks for 2022.

Its top stock bets include Tata Motors, Dixon, Persistent, Mindtree, Sona BLW and Prestige Estates.

Top themes/sector Top picks
EV Sona BLW
Minda Industries
Tata Motors
Defence MTAR Tech
L&T
IT (new-age tech) HCL Tech
Persistent Systems
Mindtree
Renewables Tata Power
Infra GR Infraprojects
L&T
Real estate Brigade Enterprises
Sobha
Prestige Estates

ALSO READ: ICICI Direct Research’s top stock picks for 2022

Indian equity benchmarks Sensex and Nifty have receded around seven percent each from their all-time peaks, touched in October 2021. Concerns about the Omicron variant of COVID-19 and sustained FII outflows have triggered the correction in the market.

A number of states have brought in restrictions to curb the spread of the pandemic.

Due to India’s vaccination program, the coronavirus pandemic now appears to be more under control, said Mohit Nigam, Head-PMS at Hem Securities. Strong economic parameters like GST collections, e-way billing, IIP, freight and consumption have been encouraging in the recent months, which bodes well well for the market, he said.

Nigam pointed out three areas for concern for the global economy:

  • Omicron
  • Inflation
  • Collapse of China’s Evergrande

He, however, also said the pickup in economic activity can “at best be delayed — but not deflected — due to new virus strains”.

“With the government-initiated reforms, digital adoption and thrust on infrastructure creation expected to gain further momentum as manufacturing activity picks up. Indian corporate fundamentals have improved materially over the past couple of years relative to other emerging markets. If the government continues its reform momentum, India may continue to attract higher FDI inflows. Several structural themes are emerging, which we believe should offer better alpha-generation opportunities,” he added.

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