Emerging Stocks That Could Breakout in 2021: An In-depth Analysis

In this blog post, break down the top motivating factors prompting the present bullish stance on a selection of stocks, versus usual market trends. Observing past market patterns and the current Nifty trends, investors are given an analytical view of stocks that are set to show promising performances.

Key Takeaways

1. Understanding the trends of Nifty and the market run-ups can provide profitable investment opportunities.
2. Investing in undervalued stocks may lead to substantial profits.
3. Several sectors such as Housing Finance, Private Banks and Public sector banks are exhibiting promising trends.

Understanding Nifty Trends (Concept One)

• Nifty's 4% upswing this week signifies potential profits. However, the super short term can see a correction at any point in time.
• There are two clear possibilities. The first being that Nifty could lose all its gains as it currently has no support, and the other being that Nifty might experience a couple of small falls and rises, establishing a new, potential support line.
• The current technical target for Nifty in the midterm is marked at 21,500, highly anticipated to be achieved this year, before December.

Market Run-Ups (Concept Two)

• Market run-ups often show sharp movements in the market. These phases are regularly exhibited and highlight the varying stocks taken up in each run up.
• Different stocks may see growth during different run-up periods. Examples of past successful stocks include HDFC AMC, Punjab National Bank, and CDSL.
• The ability to identify undervalued stocks that have yet to experience a run-up and buy them can lead to substantial profits.

Promising Sectors for Investment

Housing Finance Companies

• Aptus Value Housing Finance and AAVAS are promising stocks in the Housing Finance sector.
• These companies show all-time high profits and no significant issues, despite the entire industry experiencing a slump.
• The demand for housing finance loans, which make up the bulk of these companies' business, is expected to rise as housing prices go up and interest rates come down.

Private Banks

• HDFC Bank and Kotak Mahindra Bank are the top picks in the private banking sector.
• Both banks show all-time high profits and revenues, and their stock prices are expected to compound at a 20% CAGR.
• Given their current valuation, both of these banks are considered to be undervalued, indicating a higher potential for profits.

Public Sector Banks

• In the public sector, State Bank of India (SBI) and SBI Cards are the prospects.
• SBI is sitting on an all-time high profits with an impressive profit growth track record. A significant upturn is predicted in SBI’s future.
• SBI Cards, given the surge in credit card adoption, can enjoy an upturn, making it a prospective stock to watch.

All said and done, it is important to invest in undervalued assets with a solid foundation, to enjoy substantial profits. Always remember to opt for stocks when they are undervalued, as that is when the risk is low, and the opportunity for high returns is considerable.