Building ‘back to normal’ stocks portfolio: Check which shares may gain as vaccine slays coronavirus

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December 10, 2020 11:38 AM

Stock markets might already be pricing in the recovery that 2021 will bring with itself as the fight against the pandemic enters its final leg. Many are now sounding the alarm bell and asking investors to trade cautiously as markets enter the overbought territory.

While the Indian markets did react to the sombre mood on Wall Street, equities recovered smartly on Tuesday and ended the trading session at record highs.

With a vaccine shot now being administered to thousands across the globe, the return to the old normal looks closer than ever. Stock markets might already be pricing in the recovery that 2021 will bring with itself as the fight against the pandemic enters its final leg. Many are now sounding the alarm bell and asking investors to trade cautiously as markets enter the overbought territory. However, brokerage and research firm ICICI Direct believes that sectors which were most affected by the lockdown will now be the prime beneficiaries as we crawl our way back.

“With Pharma companies lining up to seek emergency authorization for vaccines, countries are gearing up for mass immunization programs. We believe this would set the stage for a comeback for sectors which were primarily affected such as Tourism, Entertainment, Real Estate, Building Materials, Malls etc,” they said. The brokerage has narrowed it down to top value picks across these benefitting sectors. This has resulted in a multicap portfolio with a medium risk.

ICICI Direct’s top pick in the space is luxury hospitality brand EIH, run by The Oberoi Group. The report suggests buying 20 stocks of the company and giving it a 11.7% weightage. Then comes Aditya Brila Fashion and Retail, top which ICICI Direct gives an 11% weightage, adding 12 stocks to the portfolio. It is followed by Phoenix Mills with a 13% weightage or 3 stocks, followed by Sunteck Realty with 11% weight or 6 stocks. All these stocks, apart from Aditya Birla Fashion and Retail, have zoomed over 20% in the last one month alone.

Century Plyboards has been given 10.1% weight with 8 stocks, Narayana Hrudayalaya has been given a 10.9% weight with 5 stocks. Century Plyboards share price has gained 18% in the last month while Narayana Hrudayalaya has jumped 14%. Inox Leisure, TCI Express, and Cadila Healthcare are the final constituents of the portfolio with weightage between 10.3% to 11.2%. TCI Express and Cadila Healthcare have seen their stocks jump in double digits in the last 30 days while Inox Leisure stocks have gained 7% in the same period.

ICICI Direct’s calculations show that if a portfolio is planned as such, investors would spend Rs 17,455. Here, 65.3% of the portfolio has been invested in smallcaps, 24% in midcaps, and 10.7% in largecaps.

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