(Bloomberg) -- As India prepares to celebrate its Diwali festival this weekend, stock brokers see growing signs of an economic recovery from the pandemic as reason to cheer and advise investors to buy cyclical stocks.

Companies in sectors including cement, housing, software, healthcare, telecommunications and financials are among their top picks as business activity in the nation picks up pace after the world’s largest lockdown. Diwali, the Hindu festival of lights, is considered auspicious for purchases of everything from automobiles to apartments, and even shares.

India’s factory output turned positive for the first time in seven months in September, official data showed Wednesday. And the benchmark S&P BSE Sensex climbed to a record this week as foreign purchases of local stocks surged.

“With economic activity recovering fast, more earnings upgrades cannot be ruled out,” according to Motilal Oswal Financial Services Ltd. in a note. “Strong global markets can keep liquidity abundant in the system, providing support to the overall market.”

Here are some of analysts’ top picks for the festival season:

IIFL Securities

• Reliance Industries Ltd.
  • Retail and telecom businesses have enabled significant deleveraging and are turning in solid performance, offsetting weakness in refining
  • Entry into post-paid and enterprise segments, collaboration with Google for entry-level smartphones will drive growth for Jio
• Infosys Ltd.
  • Should outperform Tata Consultancy Services Ltd. on revenue growth in FY21 for the first time in 15 years
  • With investment phase completed, margins should start to improve

Anand Rathi Securities

• Divi’s Laboratories Ltd.
  • Leading manufacturer of active pharmaceutical ingredients, with over 70% of revenue from Europe and U.S.
  • Good growth prospects thanks to supply-chain changes and diversification away from China
• VIP Industries Ltd.
  • Demand for luggage is gradually recovering as malls reopen and travel resumes
  • Strong balance sheet and market-leading position make it better placed to deal with tough market conditions than peers

Motilal Oswal

• Bharti Airtel Ltd.
  • Posted strong India mobile Ebitda growth of 16% cumulatively for last two quarters
  • Robust 10 million subscriber base

• State Bank of India

  • Earnings normalization has begun
  • Best play among public-sector banks on gradual economic recovery
  • Healthy provision coverage, robust capitalization, strong deposit base and improved core operating profitability

Axis Securities

• Can Fin Homes Ltd.
  • Strong balance sheet, low bad loans, strong underwriting and well-spread loan book
  • Ability to improve net interest margin in tough environment
  • Should recover more quickly than peers due to its loan mix and negligible exposure to property developers
• Dalmia Bharat Ltd.
  • To benefit from revival in cement demand
  • Capacity expansion, better monitoring of cost drivers and increased realization to drive sales and profit growth

Nirmal Bang Institutional Equities

• HCL Technologies Ltd.
  • To benefit from digital infrastructure buildout catalyzed by the pandemic, a 3-5 year opportunity
  • Has the biggest opportunity among among Indian players, with about 30% of its revenue coming from helping clients move infrastructure to the cloud
• Inox Leisure Ltd.
  • Considerable room for growth at an attractive valuation from a medium-term perspective
  • Should benefit from pent-up demand among filmgoers and closures of single-screen and smaller theater chains
  • Strong balance sheet is a big positive over PVR Ltd.

HDFC Securities

• Bharti Airtel Ltd.
  • Average revenue per user has risen for a fourth-straight quarter, helped by higher data usage and tariff hikes
  • Collaboration with Amazon on cloud solutions is positive
• ICICI Bank Ltd.
  • Strong retail book composition and provision coverage at industry-best level make it better placed than peers to deal with virus-related stress
  • Will gain market share from public sector and weaker private-sector banks
  • Trades at big discount to largest private-sector bank

©2020 Bloomberg L.P.