Cyclical, value stocks will rise on the cycle: ICICI Securities

Mumbai: After a decade of underperformance, capital-intensive, cyclical and value stocks are expected to outperform in the future as India begins a strong cyclical recovery from the Covid-19 pandemic, said in a statement note.

The brokerage said the market outperformance since March 2020 is driven by cyclical, capital-intensive businesses such as metals, real estate, power, autos and consumer durables.

State Bank of India, HDFC Bank, HDFC, SBI Life, Larsen & Toubro, Power Grid, NTPC, ONGC, Hindalco, and UltraTech Cement are some of the company’s top picks.

“We attribute the paradigm shift in the performance of factors, sectors and styles to emerging pockets of demand in the economy and to the trajectory of the corporate earnings cycle driven by actions linked to the investment cycle, commodities. raw materials, financial services, consumer discretionary and exports, ”he added. said the firm.

The brokerage said that with the exception of the digital economy and consumer discretionary sectors, most other capital-intensive, balance sheet-oriented stocks are reasonably valued despite outperforming.

Tata Motors, Phoenix Mills, TVS Motors, Tata Communications, Dr Reddy’s, Infosys, and Info Edge are some of its other top picks.

The information technology sector, while defensive and sluggish, has outperformed expectations of cyclical growth stemming from digitization, ICICI Securities said.


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