Venugopal Garre, Managing Director, Bernstein, expects Nifty to give single-digit returns in 2021.

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“The way I would put it is first half of the year we think the market will overshoot the target but the risk would probably emerge in second half of the year,” he said in an interview with CNBC-TV18.

Garre is 'neutral' on autos. He prefers passenger vehicles (PVs) over two-wheelers.

“Commercial vehicles (CVs) have bottomed out in terms of where they would lie in terms of absolute volumes. We do see a play in terms of CVs in terms of a recovery and this space is also going to be driven by scrappage policy. If this scrappage policy is meaningful and if it comes through in this budget and if it is implemented -that is primarily giving you an idea that we could move into positive cycle for CVs. I would not take a negative view on CVs in terms of a volume opportunity over the next two years,” he said.

Garre believes stocks like Larsen and Toubro (L&T), Adani Ports, ICICI Bank and Bandhan Bank could rise further. “There is slightly more risk but the return generation could be higher than index,” said Garre.

He is positive on IT on the services side. “We have only Tech Mahindra as a 'buy' in the midcap IT space,” he said.

On Reliance Industries Ltd (RIL), he said, “Look at earnings growth built in for RIL by the Street – it is about 50 percent EPS growth for FY22 compared to FY21. So if you are able to articulate that, a lot of it is telecom led, it may not appear costly. So even the largestcap like that – for six months has underperformed – is probably the one we would still want to retain in our portfolio.”

On production-linked incentives (PLI) scheme, he said, “If you look at the largest allocation outside of consumer electronics, one of the areas is autos. I don’t think auto companies know what it is about but if the details come through it could be positive for export oriented players. It could be even companies like Bajaj Auto which has the larger mix of the portfolio towards exports. So we have upgraded Bajaj Auto a week back. So in some way I am playing PLI."

For full interview, watch the video...

Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

(Edited by : Niral Sharma)