A smooth ride or a bumpy road? Here's how 15 top analysts foresee the market in 2021

We believe a large portion of the Nifty run-up is over and, from now on, its rise (if substantial) would be gradual and measured.

In the interim, we may see bouts of correction, especially if FPI flows dry up for a couple of days/weeks.

Stock-wise moves could continue to take place even as institutions continue to take higher exposure out of their erstwhile preferred 50-80 stocks.

We believe that small and mid-cap space will be back in favour in 2021.

B Gopkumar, MD & CEO at Axis Securities

2021 will be a year of growth. We expect the GDP growth rate in 2021 to be closer to double digits and earnings growth to be over 30 percent for India Inc. Union Budget in 2021 could also be a blockbuster. Putting these perspectives together, we are likely to see a robust 2021.

Prashanth Tapse, AVP Research, Mehta Equities

The year 2021 would be a year for restarting India with mass-vaccination drive, economic recovery and earnings growth which will lead to positive GDP growth.

Overall, markets will seemingly maintain volatility in the short and medium-term while in the long term, the resumption of economic activity and the vaccination drive will dictate investor sentiment going forward, hence, we remain bullish on markets.

Ajit Mishra, VP Research, Religare Broking

Considering the sharp run-up seen in the markets, some consolidation cannot be ruled out, given that the valuations remain stretched across the board.

The updates on the COVID-19 pandemic, vaccine progress and stimulus package announcement would be key monitorable for the investors going into 2021.

Further, the overwhelming liquidity support from central banks is likely to continue in 2021 as well, which would be positive for markets.

We believe the trend of mirroring global cues could continue in 2021 as well. However, the outperformance or underperformance would be dictated by India’s fiscal position, NPA situation and earnings.

Gaurav Garg, Head Research, CapitalVia Global Research

It would be a year when the GDP growth will turn positive and most of the sectors would start operating at pre-COVID levels.

This year, we would see recovery in mid-cap and small-cap space as well. Sector-wise, we expect IT, auto, insurance to lead the market on the basis of demand revival and availability of liquidity. On the other side defensives like pharma, FMCG might not deliver a similar kind of return as they provided in 2020.

Vineeta Sharma, Head of Research, Narnolia Financial Advisors

We expect Government thrust on defense manufacturing, PLI in electronic manufacturing, and reduction in imports from China by replacing through 'Make In India' alone could add 7 percent extra growth to nominal GDP over the next five years. We expect Nifty EPS at Rs 648 for FY22 and sporadic correction during the year 2021 would be a good opportunity to accumulate good quality stocks.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services

We expect Nifty earnings to remain largely flattish in FY21 while expecting a sharp rebound in FY22. The overall structure of the market remains positive.

At 20 times FY22 earnings, Nifty valuations are also not very expensive as it is trading marginally above its long-period averages of 18.5 times. With the economic activity continuing its recovery, it could lead to the start of the earnings upgrade cycle.

Further liquidity flows across emerging markets could remain strong which bodes well for Indian markets.

However, intermittent corrections cannot be ruled out as there is a risk of a second wave of COVID-19 and thus sustenance of economic recovery holds the key.

From the next 12 months perspective, we are positive on IT, BFSI, healthcare, telecom, auto and consumer.

Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities

CY21 will be marked with hopes of the early roll-out of the COVID-19 vaccine, normalisation of activities and unperturbed growth recovery.

We expect CY21/FY22 to be a better year with likely strong recovery in both the economy and earnings.

There will be a remarkable shift in Nominal GDP growth from -6.1 percent in FY21E to 14 percent in FY22E which will help corporates to report healthy revenue and earnings growth.

We see markets behaving differently in the first half and second half of CY21. With fresh stimulus coming from BoJ & ECB and likely stimulus coming from Fed early next year we expect FPI flows to remain strong in the initial months of CY21.

Q3 earnings season could turn to be strong due to healthy advance tax figures and also lead to some earnings upgrades.

We can expect Nifty to go anywhere between 14,000 & 15,000 range sometime in the first quarter of CY21. Post Budget and Q4 result season we expect markets to go into some kind of consolidation phase and witness time correction.

We expect moderation in monetary policies and rising yields scenario in H2CY21, which will lead to mean reversion of valuations towards 10/15 year averages.

We have used the previous 15 years peak of 19 times Fw PE multiple to value the Nifty50 to derive at our CY21 end target. We expect Nifty50 to end CY21 somewhere near 13,500 and BSE Sensex to end at near 46,000.

Vinod Nair, Head of Research at Geojit financial services

Equities will maintain their buoyancy in 2021 due to the dual effect of liquidity and earnings growth.

Today, the market sentiment, price and valuation are at a historical highs level, which should stay put in the medium-term, but a short consolidation will be good and warranted to address the over-optimism seen in the last 2-3months, driven by liquidity.

This in anticipated correction should be used as an opportunity to add more exposure in equity. We do not expect more than 7 to 10 percent correction in the main indices because the undercurrent of the market is still strong.

The best sectors to invest in will be IT, pharma, chemicals, banks and FMCG. Economy and Corporate income should grow in the next 4 to 6 quarters on a QoQ basis.

This will be supported by the further opening of the economy, lag effect of stimulus & reforms announced till date, more stimulus to be released in 2021 and vaccination.

Jyoti Roy - DVP- Equity Strategist, Angel Broking

We expect the Nifty to deliver 8-10 percent returns over the next one year. However, we are more positive on the broader markets and expect mid-caps to outperform in 2021.

We remain positive on the markets given the strong earnings revival expected in FY22 and FY23. However, some short-term volatility cannot be ruled out over the next few months given that Nifty valuations are a bit stretched at nearly 20.5 times FY22 EPS estimates.

Nirali Shah, Senior Research Analyst, Samco securities

2021 would be a bull year with markets touching fresh highs as the ground reality keeps pace with growth.

Markets could be less polarised with stock up-moves coming in from the broader indices. Valuations could remain at the higher end of the spectrum but as long as earnings catchup, stocks would continue their momentum.

From a macro perspective, with a higher supply of money in the system and interest rates at lows, inflation could be on a rise. Hence, investors should invest in stocks that hedge inflation to garner maximum returns to their portfolios.

Binod Modi, Head – Strategy at Reliance Securities

Rebound in earnings led by huge fiscal stimulus under government’s Aatmanirbhar Plan, the possibility of a revival in private CAPEX, low base and improvement in collection efficiencies by banks leading to favourable credit cost are likely to result in sustained earnings growth in 2021.

Additionally, the scenario of depressed interest rates and persistent liquidity flows from FPIs should aid the market to sustain premium valuations.

However, the recent spike in input costs and the government’s limitations for higher CAPEX after likely sharp deterioration in its fiscal deficit could be potential headwinds.

Paras Bothra, President of Equity Research, Ashika Stock Broking

Outlook for 2021 is modestly positive, however, the general improvement in demand needs to sustain for the domestic-focused sectors to perform while metals and pharma will play out as normalisation takes place.

Earnings are bound to rebound in 2021 given the lower base in 2020, the key to the pace of revival depends on Government expenditure as the intent to carry on with the reforms and the FDI inflows accompanying will sustain optimism.

Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers

Overall markets should continue to trade on a positive note in 2021 as positive news is expected to outweigh negatives in the coming year right from the start of vaccination to global population, a significant slowdown in COVID spread and recovery in overall economic activities which could then result in improved earnings for listed companies.

Investors should continue to remain invested in healthy growth and value-oriented companies with quality management to create long term sustainable wealth.

Ashis Biswas, Head of Technical Research, CapitalVia Global Research

We expect the current recovery cycle to last for another 6 to 9 months and recovery in quarterly earnings after the recent slowdown.

Further, consumer demand will continue to improve. As such Sensex around 45,000-48,000 is our estimation for the year 2021.

We view this recovery to continue driven by improving consumer demand followed by recovery in business investment.

The large-caps will do better over the next year. The current market recovery cycle is completely different than what we have witnessed previously. It will take a longer time to restore the damage by a mid to small-caps company than the company of the large-caps range.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.