SINGAPORE — Several sectors including financial services could do well in India this year if the country manages to avoid a second wave of coronavirus infections, according to one asset management firm.”If you have to look at 2021, we think financial services, home improvement and cyclical sectors will benefit if there is no surprise on the Covid-19 side,” Nilesh Shah, managing director of Kotak Mahindra Asset Management, told CNBC’s “Street Signs Asia” on Thursday.Cyclical stocks are those tied to the overall economy, and they do well when the economy is growing but falter when it contracts. Examples include cement, steel, construction as well as capital goods.”On the other hand, if there is a second wave of infection just like in Europe, then probably defensives like IT, (fast-moving consumer goods), pharma will be supported,” he said, referring to shares that provide consistent returns no matter how the stock market is performing.Indian markets have performed relatively well in recent months following a sharp sell-off in March. That’s despite the economy contracting for two consecutive quarters since April due to an extensive national lockdown aimed at slowing the spread of Covid-19.India has the second-highest number of reported Covid-19 infections in the world. More than 10.39 million people have been infected, with over 150,300 reported deaths, according to Johns Hopkins University data. But government figures indicate that the number of active infection cases has been falling.Recovery seems to be coming on quite nice and easy, month-on-month there is improvement, which is why RBI probably has little bit of time to watch out how their previous steps have played out.Nilesh ShahManaging Director, Kotak Mahindra Asset ManagementThe Nifty 50 benchmark index, which represents the weighted average of 50 of the largest Indian companies, is up 86% from its March lows. The Sensex, which tracks 30 large, financially sound companies, is up 85% for the same period.Asked if the Nifty 50 might break the 15,000 barrier, Shah said that even though the momentum right now is positive, a lot will depend on corporate earnings for the December quarter. It last closed on Thursday at 14,137.35.”If they maintain same margin which were maintained in September quarterly, then I’m sure upward movement of market is possible,” he said.Corporate earnings for the three months ending September performed better than expected, according to Kotak. The asset management firm predicted a strong earnings rebound for the 2022 and 2023 fiscal years — India’s fiscal year begins in April and ends in March the following year.A pedestrian speaks on a mobile phone as he looks at share prices on a digital broadcast outside the Bombay Stock Exchange (BSE) in Mumbai on November 10, 2020.PUNIT PARANJPE | AFP via Getty ImagesEconomic data shows signs of demand recovery in the Indian economy.Recently, the World Bank predicted the Indian economy could grow 5.4% in 2021 but said: “the rebound from a low base is offset by muted private investment growth given financial sector weaknesses.””Recovery seems to be coming on quite nice and easy. Month-on-month there is improvement, which is why (Reserve Bank of India) probably has little bit of time to watch out how their previous steps have played out,” Shah said, adding that India’s central bank has done “an excellent job in providing liquidity, maintaining financial sector stability and cutting interest rates.”The last time India’s central bank cut the benchmark rate at which it lends to banks was in May. It stayed on hold during subsequent meetings due to inflationary pressure.