Reliance, Bharti Airtel among top large cap stock picks for Diwali 2021; shares may rally up to 20%

Sectorally, the brokerage firm, believes that PSU still has steam left post Air India decision and some progress on BPCL and Shipping Corporation of India divestment. Image: Pixabay

Indian stock market benchmarks BSE Sensex and Nifty 50 have rallied nearly 30 per cent so far in the year, and 50 per cent since last year’s Diwali. On hopes of a faster return to normalcy from the COVID-19 pandemic, the Indian share market kept rising from last Diwali 2020, except for sideways trade between February 2021 to May 2021. In the Samvat 2078, HDFC Securities believes that on a Diwali to Diwali basis, Diwali 2021 will register the highest per cent returns since the 2008-09 period. Sectorally, the brokerage firm, believes that PSU still has steam left post Air India decision and some progress on BPCL and Shipping Corporation of India divestment. Banks (both PSU and private) could come back in the reckoning. Auto and Capital Goods can also do well after subdued performance over the past few quarters.

Top 4 large cap stocks to buy in Samvat 2078

Reliance Industries Ltd (Target: Rs 2,986, Rally: 15%)
Add on dip to Rs 2,336

Volatility in crude oil prices, competitive intensity associated with the telecom/retail segments, and fluctuations in foreign exchange rates are key concerns. HDFC Securities remains optimistic on its revenue and profitability trajectory with robust execution capabilities, robust balance sheet, steady growth momentum going forward.

Bharti Airtel (Target: Rs 810, Rally: 17.26%)
Add on dip to Rs 623

The brokerage firm noted that pricing competition with Reliance Jio, regulatory and technological changes and adverse currency movement are key risks faced by the company. However, strong market position in the domestic mobile and non-mobile segment, diversification across businesses, healthy operations in Africa, high financial flexibility makes Bharti Airtel attractive for investment.

Hindustan Petroleum Corporation Ltd (Target: Rs 385, Rally: 19.14%)
Add on dip to Rs 280

Economic slowdown, volatility in oil and gas prices and regulatory changes in the Oil and gas industry could impact its growth story. However HPCL’s strong operational profile driven by dominant market position supported by established marketing and distribution network and scale-up in refining capacity provides comfort, the brokerage firm said. “Successful divestment of government stake in BPCL could lead to rerating of the OMCs including HPCL,” HDFC Securities said.

Larsen & Toubro (Target: Rs 2,077, Rally: 16.47%)
Add on dip to Rs 1598

HDFC Securities said that improvement in EBITDA margin and strong cash collections were the highlights of the recent quarterly results. With improving macros in international markets and the government’s focus on infrastructure at home, L&T is hopeful of low to mid-teens growth in order inflow. The brokerage firm remains comfortable on L&T, given its strong order book, healthy balance sheet, and robust service business.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)