These blue chips could be the new engines that power equity’s run

The spotlight has shifted from mid- and small-caps to blue chips on Dalal Street in the past few weeks. The record-breaking run of the Sensex and the Nifty, of late, has been driven by software exporters and Reliance Industries. Analysts expect other large-cap stocks to start participating in the upmove soon. ET takes a look at stocks that are likely to contribute to this upmove in a bigger way hereon.

ICICI Bank
CMP: Rs 716.90
Consensus Ratings: Buy/Hold/Sell: 51/0/0
Consensus Target Price: Rs 803

As banking has not participated in a big way recently, analysts expect stocks such as ICICI Bank to be outliers in the next leg of the rally. “June quarter numbers in the banking space were impacted by Covid-19 second wave related lockdowns, but ICICI has done better than its peers. Provisions were lower which led to high profitability and there’s a steady mix of high yielding portfolio,” said Siddhartha Khemka, head of retail research at Motilal Oswal Securities.

Hindustan Zinc
CMP : Rs 328.95
Consensus Ratings: Buy/Hold/Sell: 5/9/8
Consensus Target Price: Rs 307.67

G Chokkalingam, founder, Equinomics Research, said there is rotation happening among large-cap names currently; but Hindustan Zinc has not participated. “The company has a lot of cash, and zinc prices are near a one-year high which will benefit the company. The stock is cheap compared to others in the metals space. Silver accounts for more than 40% of the profits and the business is growing,” said Chokkalingam. He has a target price of Rs 365 on Hindustan Zinc.

State Bank of India
CMP: Rs 429.10
Consensus Ratings: Buy/Hold/Sell: 47/2/0
Consensus Target Price: Rs 548.02

While the stock has doubled in the last one year, analysts think there is more steam left in it. “It demonstrated strong improvement in asset quality and focused on strengthening its balance sheet. GNPAs have declined 43% in the last three years and provision coverage ratio has increased to 68%, this is 85% in the corporate book. Subsidiaries are adding good value,” said Khemka. SBI is also trading above its short- and long-term daily moving averages.

Siemens
CMP: Rs 2,211.45
Consensus Ratings: Buy/Hold/Sell: 14/7/7
Consensus Target Price: Rs 2,134

The stock is currently trading above its consensus target price, some analysts believe the it could still outdo its sector peers. “Banking and auto are clear laggards at this time, but the capital goods sector can do better in the next 6-12 months. We prefer Siemens as ordering activity is picking up well and Siemens does well in short-cycle orders,” said Pankaj Pandey, head of research at ICICIdirect, which has a target price of Rs 2,550 on the stock. The stock has gained 95.7% in the last one year.

HCL Technologies
CMP: Rs 1,182.20
Consensus Ratings: Buy/Hold/Sell: 41/4/3
Consensus Target Price: Rs 1,205.17

Software firms have been favored on Dalal Street in recent weeks but some in the market believe HCL Tech could offer a strong opportunity. “It is still at a substantial discount to peers Infosys and TCS and the valuation gap is likely to narrow further. In dividend payout and buyback, they are not inferior to Infosys and TCS,” said Chokkalingam. He has a target price of Rs 1,300 on the stock, higher than the consensus target price of Rs 1,205.17.