Missed 2020 Rally In Share Markets? Here's What Angel Broking's Ruchit Jain Is Bullish On

Domestic stock markets finished 2020 with double-digit returns despite the coronavirus pandemic, which dragged the 50-scrip Nifty 50 benchmark to 7,511.10 -- a level last seen in March 2016. The Sensex index added 6,497.59 points to conclude the year at 47,751.33, and the broader Nifty gauge gained 1,813.30 points to 13,981.75. That marked the best annual returns for both indices in three years. The Sensex and Nifty recovered 86 per cent each since the lowest levels of the year, recorded in March after the government announced the world's biggest lockdown to curb the spread of pandemic.

The robust recovery in the markets came on the back of optimism around COVID-19 vaccines and a subsequent recovery following the technical recession. Record foreign fund inflows were fuelled by surplus liquidity around the globe due to unprecedented stimulus packages to battle the economic fallout from the pandemic.

Sixteen out of the 19 sectors tracked by BSE clocked positive returns in the year. The S&P BSE Healthcare, IT, Teck, Basic Materials and Consumer Durables indices were the biggest percentage gainers this year, rising between 20.33 per cent and 61.45 per cent.

"Our markets are trading in a strong uptrend backed by inflows from foreign institutional investors in the cash segment as well as their positioning in the index futures segment. In spite of the year-end holidays, we continued to witness their buying interest in our markets," Ruchit Jain of Angel Broking told NDTV.

"We have reached a milestone of 14,000 and yet there are no signs of reversal of the trend. Hence, as of now, a major correction is unlikely in the near term."

The leadership position of IT and pharmaceutical counters was also reflected in the Nifty basket of 50 shares, with Divi's Laboratories, Dr Reddy's, Infosys, Cipla, HCL Technologies and Wipro logging gains of between 57.04 per cent and 107.93 per cent.

In the 30-strong Sensex index, 20 shares made investors richer in 2020. Out of these, the top 10 performers provider investors with annual returns to the tune of 30.59-80.88 per cent.

(Also Read: These Were The Best-Performing Blue Chips Of 2020)

On the other hand, the S&P BSE Oil & Gas and Bankex declined 4.44 per cent and 2.14 per cent for the year respectively.

Ruchit Jain's Top Bets For 2021

"The Nifty Energy index has recently given a breakout from its previous swing highs and the momentum readings on the long-term charts are positively-placed. Hence, we are expecting stocks from this sector to outperform in the short to medium term," said Mr Jain.

His top pick from this sector is ONGC. One can buy this stock around the current price of Rs 93 with a stop loss below Rs 81 for a potential target of around Rs 115 in the next few months.

"Even the cement space seems interesting as some stocks from this sector have recently witnessed good volumes with price upmoves," said Mr Jain, who is positive on Ultratech Cement and Heidelberg Cement.

• Buy Ultratech Cement around Rs 5,288 for a potential target price of Rs 6,000 with a stop loss below Rs 4,865
• Buy Heidelberg around Rs 227 for a potential target around Rs 254 with a stop loss below Rs 212

Shares of the exports-focused IT and pharmaceutical shares have recorded gradual returns since the lowest levels of the year, whereas the heavyweight banking and financial services sectors have taken a back seat. (Also Read: Amid Gradual Surge In IT, Pharma, This Is What Analysts Are Betting On)

But is there more steam left in these stocks, especially for those who have missed the rally so far?

"No, Low Hanging Fruit Already Gone!"

"Both Nifty and Pharma continue to trade in an uptrend, and have seen good returns in the last few months. There are no signs of reversal yet and hence this trend is likely to continue. However, one should be very selective now within these sectors as the low hanging fruit is already gone," Mr Jain said.