In this article, we will be discussing regarding 3 Themes which investors can bet on for a longer period.
3 Themes to Watch:
1) Real Estate:
- Currently, it looks like Real Estate Sector is recovering from the sluggishness phase, which the sector witnessed in the last 5-6 years.
- Specifically, in Tier-1 and Tier-2 Cities, IT Sector employees have witnessed a well-enough wage-revision and wage-hikes which has led to the creation of demand for Real Estate.
- Hence, looking at the developing prospects one should keep a close watch on the Real Estate Sector. But catch here is that, one should not invest directly in real estate stocks, but should invest in Real Estate Sector aligned stocks, as generally there is an issue regarding corporate governance in real estate stocks.
- Therefore one should look for those stocks which are aligned with the real estate’s sector like housing finance stocks, paint stocks, cement stocks, ceramic stocks, consumer durables, consumer durables, and others.
2) FinTech, Financials, and Banks:
- Currently, there is a general perception that FinTech will give tough competition to the banks, but oppositely FinTech companies could face bigger challenges in raising deposits, and hence there could be a collaboration between Traditional Banks and Scheduled Commerical Banks with FinTech companies.
- Hence, it looks like FinTech companies are going to repeat the trend which Non-Banking Financial Companies (NBFCs) have done with the banks in their initial times. As of now, there are many tie-ups between FinTech and Banks for the disbursement of Loans.
3) CAPEX Theme:
a) Public CAPEX:
- The increase in revenue of the Government of India mainly through the rise in Direct Tax Collection, Indirect Tax Collection, or the upcoming Divestment plans could lead to a healthy corpus for the Government.
- Also, there are elections which are in the line-up in the coming 2-3 years, and hence a good capital expenditure can be expected from the side of Government.
b) Private CAPEX:
- For the last 7-8 years, the private large-cap companies are not spending or not spending highly on capital expenditure, but now with increased profitability and a strong consolidation, the private capital expenditure could also witness a jump.
c) Household Expenditure:
- Due to Covid, there are remarkable savings for the Households, which could turn into some kind of heavy expenditure just like upgrading of consumer durables, house, and others.
What Should Investors Do?
With the developing scenario, one should keep the sectors on the radar which are discussed above. Also, one should be watchful for the stocks selected under the concerned sector as they should be backed with good corporate governance, business performance, financials, and other attributes.