India is the place to be right now. You’ve probably heard that a million times before, but let me repeat it just for the hell of it.
The policies have no doubt played a huge role in all of this, and this has led not just to low inflation rates, but also a gradual pouring of foreign investors who are upbeat about this bullish economy projected to grow at a rate of 7-8% within the next two years.
That said, what are some of the sectors you can look to rake in from the most from an investment point of view, whether directly or indirectly? Let’s find out!
The Union Budget 2015/16 came bearing goodies for the banking sector. Recapitalizing of PSU banks by the government has had a positive effect no doubt, and at the moment they are even trading higher in a subdued market. Couple it with lower Repo rates and solid reforms by the Modi government and what you’re holding is great investor confidence.
With India increasingly looking to become a manufacturing heavyweight in the next few years, banking will have a key role to play in it regarding facilitating working capital and finance to industries. In other words, huge investments are likely to pour into the banking sector.
You might especially want to look out for banks with expertise in infra financing such as SBI, ICICI, Axis, REC and PFC.
Modi’s government is looking for inspiration from the PPP (Public Private Partnership) model to improve the country’s railway sector.
In fact, 2014 saw railway-related operations and projects cleared for 100 percent FDI (foreign direct investment) which is likely to be a good proposition for both domestic and foreign investors with 400 stations across the country calling for development: from tracks to carriages, to signals.
Some of the stocks to watch out for includeTexmaco, Titagarh Wagons, Kalindee Rail, and L&T.
Another sector you should consider, even major international defence production companies are looking to penetrate.
Although the Union cabinet set the composite cap for foreign investment in this sector at 49 percent in 2014, the government is luring investments by withdrawing excise and customs duty exemption (once a preserve of the Ordinance Factory Board and defence PSUs) to even the playing field.
Stocks to watch include Bharat Electronics, L&T, Ashok Leyland, Mahindra & Mahindra among others.
Infrastructure is expected to be one of the early beneficiaries once the economy starts steamrolling.
This sector (which includes cement), along with energy, will see huge investments being lined up over the next couple of years.
Stocks to watch out for include: India Cement, Triveni Engineering, VaTechWabag, JK Lakshmi, Pratibha Industries, ACC, Kajaria Ceramics among others.
Another high potential sector likely to benefit immensely from Modi’s pet project, the development of 100 smart cities (20 this year, 40 in 2016, and another 40 in 2017).
A smart city employs digital technologies to improve quality in the delivery of urban services at reduced costs and through effective resource consumption in a bid to make them more liveable.The last Union budget alone saw 7,060 crores allocated to the program, with low-cost housing projects and housing finance companies expected to reap big.
A host of stocks are expected to benefit, and these include cement companies, Havell’s, Asian Paints, Supreme Industries, Century Plywood, Berger Paints and many more.
There are other sectors expected to see huge investments streaming in from within and abroad, but with these 5, you can be sure to put your money where your mouth is.