Once again, the economy is facing challenges caused by the second wave of Covid-19 that hit India badly. Citizens are coping with the loss of their loved ones and the health sector though stressed, is trying to help the ailing. The first two months of the current year brought a ray of hope that the financial activities would be back on track. However, before the life could normalize, the economic operations came to a halt in many parts of the country due to the second wave of Covid19.
India surely looks forward to a fresh start. Amid uncertainty, there are a few sectors which look promising. Led by IT and Pharma sectors followed by banking, hospitality, automobiles and commercial real estate sectors also look promising.
Pharma: Covid-19 has changed the dynamics of the pharma industry all over the world. The vaccination drive has created opportunities for pharma companies and Indian pharma players too shall have their role to play. 60 to 80 percent of the population globally needs to be vaccinated in the coming days. At least the next two quarters will witness a good traction. Investment in large cap pharma is recommended. Mid cap pharma is still transitioning. Along with lifesaving drugs, immunity boosting supplements are also in demand, resultantly the sector will continue to be in a stronger position. However, once the Covid situation settles, there could be a decrease in the investment in this sector. Consider pharmaceutical companies like Sun Pharma, Cipla, Zydus, Aurobindo pharma, Dr. Reddy’s and Lupin to invest your money.
Information Technology: Dependence on Technology is inevitable as majority of us are confined to our homes. Covid-19 has brought the work from home culture, and it is here to stay for a while. All transactions are done by using various apps, right from ordering vegetables to banking and others. The new normal includes social distancing as a must and physical transactions are not possible. The growth of IT sector is expected to be at a CAGR of 16%. For long term growth and protection against inflation, this sector is worth investing in. TCS, Infosys, Tech Mahindra, Wipro, Oracle, MindTree, TechMahindra, Mphasis, L&T Infotech etc. are the stocks you can park your money in.
Chemicals: India has a great future in this sector as China will be soon replaced by India. Investors all over the world are preferring India as a potential market. Large chemical companies are expanding their capacities and the chemical stocks have gone up in recent years. Alkyl amines, Vinati organics, Navin fluorine, Aarti Industries etc can be considered for investment purposes.
FMCG: Demand of essentials have been consistently up during the second wave of pandemic. Lockdowns and supply chain worries have always resulted in over stocking or at least pre planned stocking of FMCG products. The trend does not seem to settle anytime soon, and consumer essentials shall witness a boost in sales. Nestle India, Britannia Industries, United Breweries, Venky’s India are some of the FMCG investible options in India.
Banking: Banking sector has not been very promising due to reduced offtake of loans and recessionary markets. However, once the economy starts getting better, the banking sector will pick up. As banking and other financial sectors are interrelated, the use of banking services is a must. If you are looking for investing in the banking sector, then you may choose HDFC, Kotak Mahindra, ICICI, Axis Bank, IDBI, IndusInd, Bandhan Bank etc.
Telecom: Communication is the key during the global pandemic situation. Both the health sector and government are largely dependent on telecommunication for getting updated about the ongoing outbreak. At the same time those who work from home are also finding telecom as a crucial factor in their day-to-day life. This sector has greater prospects in the coming years as well. Reliance Comm, Vodafone Idea, Tata Teleservice, MTNL and Bharati Airtel are the stocks that can be considered for investment.
Automobiles: The automobile sector marked good results during the last quarter of 2020. Personal mobility is gaining importance and Covid has forced people to get their own vehicles rather than travelling with other passengers in a public transport. Export volume too might shoot during 2021. The sector can offer jobs and persistent improvement in the rural economy. Ashok Leyland, Bharat Forge, Bajaj Auto and M & M will see growth in the current year.
Real Estate: Real Estate is likely to get a momentum boost in 2021. There have been various sops and discounts offered by the developers, stamp duty cut by state governments and so on. Though the demand for housing is currently down but people are eager to find houses into suburbs. Since interest rates too are low, making housing sector an affordable option. Oberoi Realty and Godrej Properties are the top picks. DLF, Phoenix Mills, Prestige Estate, Indiabulls RE, Brigade Enterprises are also good stocks in this sector.
Bhoi Smrutirekha Dharanidhar