Technical stock picks for 2021: Buy these 7 shares; charts signal as high as 30% rally next year

Indian share markets witnessed a correction earlier this week on the back of new COVID strain found in the UK. Headline indices BSE Sensex and the broader index Nifty 50 have rallied over 80 per cent from their respective March lows till December 21, 2020. According to the analysts at ICICI Direct Research, Nifty witnessed a V-shaped recovery post a 40 per cent correction, on the back of a host of positive news flow in 2020. The brokerage firm expects Nifty to remain in a structural bull phase with an upside target of 16,200 that is implied by the three year’s consolidation breakout (12200-8000). “Within the bull phase, a normal correction of 15-20% cannot be ruled out. However, such a correction should not be construed as negative,” it said.

The brokerage firm also sees Midcaps to lead equity outperformance in the calendar year 2021. It mentions that Indian midcaps and small caps have a strong correlation with developed market peers. As US and European midcap indices have already breached their multi-year highs, ICICI Direct Research expects secular outperformance to follow from Indian midcaps. The brokerage report noted that over the past four decades, global equities have always generated positive returns in a year following US elections, wherein BSE Sensex gained an average 37 per cent. “We expect rhythm to be maintained in CY21,” it said.

Technical stock picks for 2021

Infosys: As the IT sector has been a major outperformer in the calendar year 2020, the brokerage firm expects the same performance next year also. Digital acceleration, large deal wins vendor consolidation and cost rationalisation remain key long term drivers. It expects the stock to extend the current rally and head towards Rs 1,410 in CY 2021, an 18 per cent upside.

United Spirits: The brokerage firm noted that pick-up in consumption due to the festive season and opening of on-trade channels remain key triggers for the stock, along with long term trend of home delivery of alcohol, going ahead. It sees the stock to resolve higher and head towards the target of Rs 660 in coming quarter, implying a 20 per cent rally.

Bharat Electronics Ltd: BEL has envisaged increasing contribution from non-defence segment to from current 7 per cent of revenue to 15- 20 per cent over the next three to five years. During the second half of the calendar year 2020, the defence sector witnessed a strong buying demand. ICICI Direct Research expects it to accelerate upward momentum towards Rs 140, a jump of 27 per cent.

Relaxo Footwears: In the current set-up of work-from-home, sales of sandals and flip flop have witnessed a significant surge in demand. It will take Relaxo Footwears to jump 27 per cent to touch the target of Rs 985 pegged by the brokerage firm.

Dr Lal PathLabs: The brokerage report highlighted that lean balance sheet, strong margins profile and healthy return ratios are some of the legacy attributes for the company. In the coming quarters, ICICI Direct Research expects it to head towards Rs 2,840, rallying 31 per cent.

Timken India Ltd: The report mentioned that the railway segment has emerged as one of the key contributors to Timken India’s topline in recent times. The brokerage firm sees it rising to Rs 1,360 apiece, offering returns of up to 26 per cent in the next year.

Can Fin Homes: ICICI Direct Research said that the NBFC sector has resumed its primary uptrend after a corrective decline of the last three years. Can Fin Homes has strong capital adequacy that would enable the company to push for growth as situation improves and opportunities increase. It forecasts the stock to accelerate up move and head towards Rs 580 apiece, an upside of 27 per cent.

(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)