21 Stocks for Medium/Long Term SIP: HDFC Sec Research Report

Stocks for Long Term SIP

 What a year 2021 has been so far! The fear, the hope of recovery, the support from Central Banks and Govts across the globe, the response of the Pharma Industry to the pandemic and the resolve to overcome the difficult times have been unique and noteworthy.

 We believe that the thrust toward a manufacturing-led growth in India will result in a virtuous cycle of productive growth of investment – job creation – income – saving – investment. India could be one of the few large economies offering high nominal growth. In the last few years, we have witnessed a consistent deliverance in structural reforms by India’s policy makers. We remain optimistic on the prospects of Indian economy and corporate earnings growth over the next few years.

 India story faces concerns from the global growth environment, delivery and execution of policy reforms, a faster-than-expected rise in inflation partly led by commodity price rise, increase in asset quality stress, risk aversion in global capital markets, faster-than-anticipated tightening in global financial conditions. India is currently undergoing second wave of Covid 19. An analysis of US, Russia and Europe suggest that daily case additions in 2nd and 3rd wave have been 1.4-12x than the first wave. The wave has lasted for 2- 3 months. A prolonged pandemic spread and an increase in restrictions may curb economic activity in FY22, which may further defer revival in FY22. Nifty earnings growth of 30%+ in FY22 can come under threat if Covid situation lingers longer.

 A stock SIP is a superior way to invest systematically. It enables investors to buy stocks (amount/quantity based), periodically (weekly, monthly, etc.) in a systematic manner. It is the ideal method of investing for long term investors. It helps you make the best of the unpredictable market by adopting a disciplined investment strategy.

 We have prepared a list of largecap (and some midcap/smallcap) stocks which can be used by investors who seek to invest in them systematically over the next few years. Apart from the year 2021, incidentally, HDFC Securities Ltd has entered its 21st year and hence the 21 stocks. Despite the known headwinds, markets have not corrected sufficiently on the back of liquidity and hopes of early restoration of normalcy from Covid-19 pandemic. Hence staggered buying is recommended to benefit from any future falls and have better margin of safety.