Naveen Kulkarni, Head of Research, Reliance Securities said, "The ongoing festive season has brought some cheers, as the demand scenario in the country seems to be improving, while the structural reforms initiated by the government will have a marked long-term impact. Our last year's picks were backed by strong earnings visibility as we expected the market to remain range-bound, while we preferred large-cap stocks compared to mid-cap ones."

However, we find the scenario has changed significantly over the last one year, as the stocks have corrected quite significantly, while major reforms have been initiated by the government. Apart from the major cut in corporate tax, a major cut in personal income tax rate is also on the cards over the next twelve months, which is likely to provide a big boost to the demand scenario.

Good monsoons during the year will also help a good Rabi crop, which will help the rural economy and keep inflation under the RBI’s comfort level.

Stock Recommendations from Reliance Securities

HDFC Bank: Consistently gaining market share and well-capitalised to deliver even amid a tough environment. Target price Rs1,430.
ICICI Bank: Growth prospects improving and gaining market share. Relatively cheap private bank with a solid retail franchise. Target Price Rs500.
HCL Tech: Undervalued for improving growth prospects. One of the cheapest large-cap IT companies. Target Price Rs1,200.
Sonata Software: A vertical and platform-focused IT firm with Microsoft partnership fulcrum. Target Price Rs395.
Crompton Greaves Consumer: Robust product portfolio, established brand equity with wide distribution network. Target Price Rs297.
Ashok Leyland: Strong M&HCV industry rebound in FY22 on the back of new investment cycle and pent up demand to upscale earnings and valuation multiple. Target Price Rs 111.