BSE Power, BSE Metal, and other sectors to deliver a solid return to investors

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BSE Power, BSE Metal, and other sectors to deliver a solid return to investors

Last year, a large number of sectors on Dalal Street managed to bring in a handsome return to investors. The BSE Power index was the top sectoral gainer on the exchange with a rally of 69 per cent. It was followed by BSE Metal up 66 per cent Information Technology up 55 per cent Realty up 55 per cent and Capital Goods up 53 per cent Other sectoral indices gained between 9 per cent and 50 per cent during the same period.

The benchmark BSE Sensex increased by nearly 22 per cent in 2021, because of the gush of liquidity and robust inflows by institutional investors. The market will continue to deliver double-digit returns to investors and select sectors may produce big gainers, according to analysts. Here is what they have to say.

The future theme for India is green energy, new generation business, tech-based, sugar and online-based companies. The availability of such themes in the market is limited, while those few that are available trade at expensive prices. Good businesses with a strong business model are expected to do well and trade at healthy valuations.

The brokerage is positive on the long-term perspective of the market, based on the economic and market development. In 2022, it believes that the sectors like housing, banks, infrastructure, digital and cloud and telecom could deliver a solid return to investors. Housing and banking will be a main theme to watch out for because of their improved outlook and current lower interest rate regime. The infrastructure sector is an emerging theme as the government increases its spending in this space moving forward. Digital and cloud will continue to be a long-term structural theme.

Given the uncertainties mentioned elsewhere, one can focus more on defensives FMCG, Pharma and IT services until there is more clarity on the economic growth and inflation across the globe. Despite the fact that defensives may not be cheap, this is because of the fact that defensives may not be cheap. These sectors may provide downside protection in case the markets underperform, as they may fall less than the market or other sectors.

Reliance Securities is positive on IT names on automation and the potential for artificial intelligence, machine learning and the internet of things. Indian IT names witnessed strong deal wins and margin recovery as a result of increased offshoring and higher utilisation. Shah is also a big fan of the EV space. The adoption of electric vehicles electric vehicles EV would be a transformational change over the next decade, with an increasing focus on new EV launches by most original equipment makers. It is possible that EV adoption would be gradual but there is a huge potential for growth in terms of localisation as well as an opportunity to make India a global manufacturing hub for EV and EV equipment or ancillaries.

Technology, pharma, and healthcare have been in the limelight for almost two years. These sectors will continue to be relevant to the economy for many reasons, including the increased dependence on digitisation in the wake of restricted mobility, the need to transact online, and the reliance on pro-active and preventive healthcare, all of which are some of the peculiar circumstances that prevailed recently.

The economic revival in the US and Europe has also contributed to the prospects of traditional product and services tech companies. There is a revival of the real estate and all related ancillaries at this time, and it may continue to rise with the revival in economic activity.

The actual numbers from this space indicate a revival after a prolonged period of stagnation in prices. Major private banks and the top three or four PSU banks, and select NBFCs, will be well-bid as we progress into the next year. With increased digitisation, renewed thrust on retail business, and a not so problematic NPA profile, the financial sector may see a major surge in growth.