Top 10 Stock Picks For 2021 By HDFC Securities

Consumer Durables/FMCG

FMCG demand remains steady and continues to be led by higher rural penetration. Rising farmers’ income could be a structural tailwind for the sector.

Consumption has made a strong comeback in 2HCY20, post the unlock, and rural demand remains healthy. Urban consumption demand, especially in home improvement segments, seems sustainable as consumers look to purchase durables and appliances. Given low penetration levels in multiple categories, these offer a long-term growth runway for strong brands with a deep distribution. Valuations are rich in most segments, but we see select ideas where long-term growth rates could surprise positively.

Value plays/select PSUs

We believe that select PSUs with strong competitive positioning in their respective sectors such as Power, Oil & Gas, Utilities, Coal and large Banks look
attractive, offering deep value.

The government is also starting to unlock value in some of these through strategic sale, buybacks which could lead to a sharp rerating from depressed levels of valuations. Most of these stocks also offer high dividend yields making them attractive in the current low-interestrate environment. We have increased exposure to these names in our model portfolio over the past six months as they have become attractive, and we remain confident of their business models over the medium term.