Calendar year 2015 (CY15) turned out to be a year of consolidation for the Indian equity markets. After a near 30% rally in CY14, both the frontline indices – the S&P BSE Sensex and the CNX Nifty – are set to end CY15 with a loss of around 5% and 6%, respectively.
On the other hand, the mid-and the small-caps outperformed the frontline indices with a gain of around 6% each.
As we head into 2016, most analysts remain optimistic on the road ahead for equities as an asset class, but do not expect a runaway rally in the leap year.
Analysts at SMC Global, for instance, expect the S&P BSE Sensex to trade between 29,700 – 31,000 levels while the Nifty 50 hit 9,000 – 9,500 levels in the year 2016.
"2015 saw economic and market performance diverge: broader indices (BSE500) outperformed narrower ones (BSE100/Nifty) across sectors and time periods. We believe global linkages hurt large-caps," points out Neelkanth Mishra, India Equity Strategist at Credit Suisse.
"India macro indicators continue to look good, and it remains among the fastest nominal GDP and earnings growths economies. Global weakness though could be an overhang, and divergence between markets and the domestic economy could persist. Though, we expect a slower pace of EPS cuts. Market returns could track EPS growth," he adds.
Here is a compilation of stock recommendations for calendar year 2016 from top brokerage and research houses:
HDFC Bank, Infosys
Overweight on consumption (best play on broad-based pick-up; pay commission), and underweight financials (asset quality). Likely outperformers: Tech Mahindra, HUL, UltraTech Cement, Tata Motors. Recommend shedding positions in SBI and Bharti Airtel.
Remains overweight on India; and the technology, industrials, discretionary and banks and insurance sectors. Maruti Suzuki, Axis Bank, Container Corporation of India, HCL Tech among top picks
Dalmia Bharat, Jamna Auto Industries, Natco Pharma, Siyaram Silk Mills, United Spirits
Religare Retail Research
Amara Raja Batteries, Britannia Industries, Century Plyboards (India), Somany Ceramics
Motilal Oswal Securities
SBI, ICICI BANK, BPCL, Interglobe Aviation (Indigo), Bharat Forge, Ashok Leyland, DHFL, Inox Wind, Vinati Organics and Granules India
Reliance Industries (RIL), Zee Entertainment, Tata Power, Biocon, Dewan Housing Finance Limited (DHFL), D B Corp, Sintex Inds, Kalpataru Power, Essel Propack, Suprajit Engineering
Aurobindo Pharma, Camlin Fine Sciences, Capital First, Force Motors, KPR Mills, Majesco, Nesco
HCL Technologies, Lakshmi Vilas Bank, Lumax Industries, PI Industries.
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