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The rally in the Indian equity market may continue in 2021 also and intermittent corrections should be used as buying opportunities, said brokerage firm ICICI Direct in a note on December 23.
"In 2021, Nifty is expected to remain in a structural bull phase with an upside target of 16,200 that is implied by the three year’s consolidation breakout (12,200-8,000)," the brokerage said.
"Within the bull phase, a normal correction of 15-20 percent cannot be ruled out. However, such a correction should not be construed as negative. Rather it should be capitalised on as an incremental buying opportunity with key support at 11,400," it added.
The brokerage is optimistic about the mid-caps. Mid-caps will lead to equity outperformance in CY21, it said.
Nifty Midcap and Smallcap indices recorded resolute breakout from three year’s bear phase signalling a secular bull market ahead, as breakouts are further validated by strong breadth thrust, ICICI Direct pointed out.
"Indian mid-caps and small-caps have a strong correlation with developed market peers. As US and European mid-cap indices have already breached their multi-year highs, we expect secular outperformance to follow from Indian mid-caps," ICICI Direct said.
ICICI Direct pointed out that over the past four decades, global equities have always generated positive returns in a year following US elections, wherein Sensex gained an average of 37 percent and it expects the rhythm to be maintained in CY21.
Infosys, United Spirits and Bharat Electronics are among its top picks for the year 2021.
Besides, the brokerage firm believes emerging markets will outperform developed market peers in 2021.
"MSCI Emerging Markets (EM) index is breaking out of a decade long consolidation, after relatively underperforming developed markets (DM). Further, the relative placement of EM index with S&P500 is at a long term cycle low and is poised for reversal," said the brokerage.
"A weak dollar has led the Nifty in dollar terms to break out of 12-year long consolidation. India is expected to lead within the EM space as it stays key beneficiary of FII inflows," it added.Disclaimer: The views and investment tips expressed by 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.