Its been quite sometime after my last post, and there have been lot of changes around. Trump victory, UP elections BJP winning and slowly complacency around the globe with no major upcoming event. Congratulations!! we are staring at a Mother of all Bull Market
Why do i feel we would see a bull market? I was always bullish on Indian equities now that the reforms are slowly picking up. The effects of these reforms will be visible in the next 2 years. The oppsoition parties in India are crying fowl what is that major reform from this government, i would only tell we don’t have to do different things to be a success, we only have to do things differently, in which the NDA government under PM Narendar Modi is highly successful. They have kept a tab on corruption no major scams on any MP, a sound foreign policy, a strict check on the twin deficits in the face a opposition from their own party members. Prudence over growth these are policies which are not big bang but are the right moves which will create a very successful and great country. Supporting all this one of countries lesser developed state UP voting for BJP for a full majority even after grave moves like Demonetization which has not yielded any major good news for government apart from bounty points. Next year many large more developed states are going for election and this victory would only pave way for more similar results, And finally a NDA govt in 2019 Loksaba polls. I know readers would feel i am a BJP sympathizer here but growth needs clarity when Business leaders see this they would be ready to invest and take chances and this is what was lacking all these days. More clarity, More Investment, More Growth. All in all a Bull market one would remember for ages is about to start.
Which are sectors to be invested in?
- Invest into infrastructure companies
- Railways would see a major push look to invest into companies manufacturing equipment which would help increasing speed of operating the trains. Yes currently we are operating at 50-60kmph on our faster trains there would be a push to increase speeds of all trains to atleast reach 120kmph. Look at the companies developing any security devices for railways, the emphasis would be more on security along with speed.
Companies to Look : Railway equipment manufacturers
- Power production and transmission
- Power production would be given a major boost but most power generating units are already stressed slowly they would become profitable in the next few years owing to lower fuel costs, push towards greener alternatives and lower cost of capital.
- But a much better placed sector would be power transmitters. Once the power produced using alternative fuels will make surplus and deficit zones during the day in some places and deficits during different times, say solar operational only in day, Nuclear operational all day. Also there will be states where there would be continuous deficit so power transmission and infrastructure will be crucial and could give better returns.
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Companies to Look : Companies into manufacturing transmission equipment and into transmission
- Defense equipment manufacturing
- The Make in India campaign has not yielded any good returns till now but going forward atleast in the defense sector there would be significant growth
Companies to Look : Companies into defense equipment like Reliance defense could be a big beneficiary
- Low cost housing
- A major push towards low cost housing and increase in income of low income groups and lower interest rates would increase demand for low cost housing. Access to easy loans with the new age Banks and Home finance companies would drive this sector.
Companies to Look :
- Home finance companies, and companies manufacturing materials used in low cost housing
These are the sectors to look for growth in this Mega bull market, Will update a more stock specific view very soon.