While the stock market hasn’t exactly been as stable as investors would have liked throughout the pandemic, India managed to close 2020 on a high note with gains sitting at around 15 percent. Both smaller-size and midcaps outperformed relative to the previous year. A lot of stocks ended up outperforming in the year and will look to retain the baton in the coming year. Paired with some budget announcements, this is a very good time to consider investing in the stocks of several over-performing sectors that look to continue a strong push.
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Pharma
This is one of the main industries that you are going to want to target with your investments. With it being such a key area in India post-pandemic, but also throughout the entire world, this industry is expected to continue to skyrocket in growth. MNC’s offering China a near 50 percent discount getting drugs approved in the market. This can end up creating a lot more growth opportunities for the larger Indian players in the pharma industry. With over 60 to 80 percent of the entire world’s population looking to get vaccinated within the coming year, it is giving major pushes to the profits of these companies. Also, it’s important to note that big Indian pharma companies are expected to get a portion of those sales. Thus, investing in this sector can give good returns and it is expected to do so for the next several quarters at the least. Ideally, you want to stick to larger caps in this market with midcaps still in a transitioning period. Mid-caps are experiencing a lot of momentum, but larger caps are the safer bet for right now. Some of the best stock recommendations within this sector would have to be Lupin, Cipla, among others.
IT and Technology
With more and more of the world continuing to get connected all the time, technology is always a good investment decision. However, with the pandemic hitting the world, technology and its growth potential have only gone up quicker than expected. With more people having to work remotely and social distance themselves, everyone is using technology for their daily life. Consumers are now being forced to complete meetings virtually, bank online, and more. This has led to the development of newer and more innovative technologies. This sector is expected to grow at a CAGR of 16 percent and it will continue into its transformative stage. You can find this reflected in the stock prices within the sector. Those who are long-term investors that are looking for stocks with growth potential are going to want to look to invest in this growing sector. It is only going to continue to experience growth and it will dictate the overall market’s performance. Some of the best stock recommendations for this sector would be TCS and HCL Technologies for the larger caps. Whereas, some good mid-cap stocks to look for would be Sonata Software and even LT technology. All of these are likely good 2 to 3-year investments to consider making. If you want to get someone else to invest in a diversified portfolio take a look at this HNE update to get the latest.
Steel
Throughout the years, domestic companies have focused more on import substitution over export. The PLI scheme extension to specialty steel is only expected to continue to drive this in the same direction. Within this scheme, everything from coated products to steel rails is included. This particular scheme is going to be integral in pushing domestic companies to increase their manufacturing capacities and to develop and innovate for new products. Steel has a lot of different applications that are expected to drive demand including railways and automobile production. Some of the best steel stock suggestions would be JSW Steel, SAIL, and more.
Chemicals
This particular sector is a good option for those who are looking to capitalize on the trend of moving out of the Chinese market and into India. The global market share India has on chemicals is trending upwards and it shows that there is significant growth potential in it. A lot of the companies that are heavy producers are investing even more into their facilities to ramp up capacity. A lot of chemical stocks have rallied within the last few years which is making it a great opportunity for savvy investors. Some of the best stock recommendations for this sector would be Aarti Industries and Navin Fluorine – do it yourself via one of the many apps or get a good investment manager.
While the market has been less predictable and stable than in years past, having a good understanding of the market and where things are going can put you in a good position to succeed within the stock market. You want to understand the nature of the stocks you are investing in before making any sort of investment whether it be short-term or long-term.