Tag: trading

Money makes the world go round, quite literally. Interesting 21st century shift of focus, isn’t it? We will dwell on that phenomenon under a relevant topic, for now we will look at just the right investment opportunities that the wise are most likely to target in the year 2021. Something that should make your & my bank accounts recover fast as our nation has, from the Wuhan virus.

IMF (International Monetary Fund) has projected a GDP growth rate of 11.5% for India, highest among all major economies including China’s – this is the kind of positive announcement we needed to set foot in the year 2021. And it showed its magic already. Stock markets jumped in excitement after Budget 2021, doubling the cheer for investors. Not forgetting that markets are highly speculative and volatile and do not always truly behave as per the economic realities on the ground, hence risky. But at the same time equally rewarding if you observe the patterns carefully over time.

So if you think it’s time to gear up and make some far-reaching changes in your stock portfolio – in order to either revamp your share market investment that was hit by the turbulent 2020, or to readjust/diversify it to continue getting stable returns or simply to reap the gains of the rising share market – here are some of the best stocks to place your bets on in 2021.

1. Infosys

Industry: IT – Software

Market Cap (INR. cr): 550,100.64

Stock exchanges: BSE (500209), NSE (INFY)

Share price history:

According to key brokerages, buying stocks in Infosys is worth it. IT major in the top spot shouldn’t be a surprise, especially in the post COVID economic environment. Businesses are increasingly relying on digitisation, making information technology most sought after domain. Healthy deal pipeline, cost efficiency & account expansion are some of the other factors going in this stock’s favour, experts speculate.

2. Bharti Airtel

Industry: Telecommunications – service

Market Cap (INR. cr): 316,940.60

Stock exchanges: BSE (532454), NSE (BHARTIARTL)

Share price history:

Telecommunications powers IT & vice versa. Both are interdependent. With internet penetration growing rapidly, and India’s rural population largely having access to internet though Smartphone, (up to 50% of population has gotten access by 2020), this sector is booming for sure. So Airtel overtaking Jio in adding new monthly subscribers in 2020 isn’t a shocker. Moreover, social distancing has made mobiles & broadband into a necessity for businesses & individuals across. Hence, foremost brokerages give thumbs up to this stock as well.

3. SBI

Industry: Banking, Finance

Market Cap (INR. cr): 356,404.36

Stock exchanges: BSE (500112), NSE (SBIN)

Share price history:

SBI is the largest public sector bank & one of the biggest corporations of 2020 according to Fortune Global 500. It is also one of the best performing stocks of recession year 2020. Consistently falling NPAs must be the reason for investors’ growing confidence in this bank with over 22,000 branches. Top brokerages too favour investing in this stock.

4. Bajaj Finance

Industry: Financial Services (NBFC)

Market Cap (INR. cr): 331,365.79

Stock exchanges: BSE (500034), NSE (BAJFINANCE)

Share price history:

This is another stock that brokerages approve for inclusion into your long term investment portfolio. Short term lending is the companies’ forte. A subsidiary of Bajaj Finserv Ltd. and part of the Bajaj group of companies – Asset management, wealth management & insurance are its other core financial services. What is contributing to this sector’s growth? Low interest rates, foreign fund inflows further lowering cost of money thereby liquidity and of course consumer behaviour i.e. tendency to spend more than save.

5. HDFC Bank

Industry: Banking & Financial Services

Market Cap (INR. cr): 847,754.65

Stock exchanges: BSE (500180), NSE (HDFCBANK)

Share price history:

Started as Housing Banking Development Corporation, the largest provider of housing loans, HDFC Corporation diversified into retail banking in 1994. The largest private sector bank by assets and largest by market cap, HDFC Bank gets an almost unanimous ‘buy’ recommendation from brokerages. After the market crash of March-May 2020 across all sectors, this one has shown an almost steady upward momentum. The health of this bank is also reflective in its investment of INR 1,000 crores for reconstruction of Yes bank in order to prevent its collapse in Mar 2020 due to excessive bad loans.

This is not an exhaustive list or a blanket recommendation for all investors given the varying degrees of risk & reward taking potential. Plus, each investor has a set of expectations unique to his needs/goals. Therefore these are just a few shares (out of several), keeping one common goal out of many in mind, among multitude of investors – low risk with a good return over a long term (typically 3 years or more).

Zerodha Story – Founders | Revenue | Competitors | Business Model | Profit

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How to Decide Where to Invest

Wondering what are the parameters you should consider while zeroing in on a stock? A few factors you must consider before you make your investment are:

Market Capitalisation: It is simply the market value of the publicly listed company i.e. the number of outstanding shares multiplied by the current price per share. Hence it is a variable & keeps changing. Look out for the trend over a period of time to derive meaning. It represents size of the company (large cap/mid cap/small cap); a high market cap (relative to the industry of the company & its peers) further indicating a more stable growth, hence low risk perception.

Sector/Industry Assessment: To look for the growth prospects of the sector you plan to invest in has crucial value. Say you want to buy stocks of a company operating in the software industry. Currently IT is a booming sector; software products & services are in huge demand due to digital drive by govt as well as global shift in consumer behavior showing inclination towards technologies like cloud, AI, robotics, 5G etc. Similarly healthcare/pharmaceutical & e-commerce are seeing an unprecedented growth due to obvious & significant post pandemic socio-economic changes. Other promising sectors would be power, infra, chemicals et al. It all comes down to which sector attracts you.

Financial health of a company: Revenue, operating/net profit or loss, EPS, P/E ratios etc. are some of the basic pointers of the performance of a company. Analyse & compare these over a couple of quarters or years depending upon your short/long term investment goals.

Economically, 2021 clearly is a risky terrain, just showing some green patches but with whole lot of uncertainty about the future path. So ‘caution’ is the word for 2021. Growth looks certain, in all sectors of the economy but the direction & extent will vary depending on how long & successful the vaccination drive turns out to be and that is what will eventually decide the sum total of returns you pocket.

What Is Unique About Investing in Stock Market

Very simplistically put, just like how you plan your diet according to your taste, you must plan your stock portfolio to best suit your financial needs and interests. Pack your investment portfolio with choice of healthy, interesting & may be a few experimental options as well. And then start to watch & study the trend of your stock performance or ROI (return on investment) over time, because this is primary in becoming a successful investor & ensuring a robust financial health.

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Conclusion

P.S: Again, these are only a few stocks with large market cap that brokerages & market analysts have favored buying or holding for a rather careful investor looking to safely park his money (away from gold or real estate) for a long term. There are many more, in many other industries with mid & small market cap that could give you rich returns if you do basic research & then keenly watch their trend. Timing is as important as the budget & the shares you pick. So here’s wishing a happiness ‘index’ for your shares too!

Frequently Asked Questions – FAQs for Share Market

How do you double your money?

Most of us us think its a wild goose chase, but did you know according to ‘rule of 72’ you could calculate the time it’d take to double your money? The time it’d take to double your money = 72/rate of return

Example: At 10% return money will double in 72/10 i.e. 7.2 yrs; Similarly at 8% return money would double in 72/8 i.e. 9 years.

Do I need a large sum of money to invest in stocks?

Absolutely not! You can start investing with a small amount of a couple of thousands to begin with. And that is usually recommended for beginners.

Which are the best stocks to buy in India?

Some of the best stocks to invest in India are:

• Bharti Airtel
• HDFC Bank
• SBI
• Infosys
• Bajaj Finance
• Hindustan Unilever
• Kotak Mahindra Bank
• Asian Paints