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Pick the winners of the next few years and invest
Published On , 2 Feb 2018 By TOI
It’s the new year, and fund managers and investors both often look for new themes to invest their money.
Analysts and fund managers are picking at least four sectors on which they could bet their money on. According to some fund managers and analysts financial services, pharmaceutical, logistics and consumer goods sectors could be among the winners in 2018 and beyond.
According to them, a large number of financial services firms are looking to be good bets since, among other reasons, the ongoing non-performing assets (NPA)-troubles are looking to be peaking. So in the next round it looks like the stressed assets troubles could see a gradual reduction in credit cost, which could be a major positive for firms from this sector. According to some fund managers and analysts the pharmaceutical sector, which has been going through a bad patch for the last few years due to issues in the domestic and foreign markets, could also be potential winner. And the reasons are more domestic than foreign. Demographics, rising income level, greater health awareness, increased precedence of lifestyle diseases, and improved access to insurance and under-penetration of medical infrastructure are some of the tailwinds which could favour the pharma sector in the next few years.
Another sector the some of the fund managers and analysts are betting on is the logistics sector where, they believe, immense opportunity exist in the due to the implementation of GST and also the government’s push towards setting up dedicated freight corridors.
They believe higher aggregation of cargo could lead to scale benefits for transporters. There are higher chances of consolidation of warehouses also. In addition, fewer tax incidence will drive focus towards turnaround time rather than freight cost arbitrage. The GST could also lead to a shift from unorganised sector to organised sector which is a positive for domestic transportation focused players.
The government is in the process of setting up the biggest rail freight capacity addition in India which is the Delhi–Mumbai freight corridor. This has the potential to shift freight transport currently done through road to rail. The Delhi-Mumbai corridor is also a huge impetus for container rail operators. Also higher movement of double-stack containers is leading to efficiency gains in the sector, they said.
Consumer goods is the other sector that many think could be among the winners in the next few years. Rising income level, improving lifestyle and a move from unorganised to organised sector, post GST implementation, could lead to improved opportunity in the sector. Also they think that a rising income levels and improving lifestyle is creating potential for nascent categories in consumption products which include sub-segments like body care, deodourant, facial care etc. In addition, implementation of GST could trigger a move towards a formal economy resulting in an increased share for the organised sector, they said.
They say investors could invest in stocks from these sectors directly. However, a less risky proposition for investors is to invest through the mutual fund route, by investing in schemes which have stocks from these sectors in their portfolio.
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