Rohit Vaid Mumbai, December 29, : .Top analysts have deemed sectors like FMCG, pharma, and IT services as safe and satisfactory investment options for 2022, given the uncertainties that India’s equity markets face next year.
These sectors are more appealing than other because of factors such as price, growth potential and evolving economic recovery.
Because of the uncertainty, it is possible to focus on defenses, such as FMCG, pharma and IT services, until there are more clear indications about economic growth or inflation around the world.
Deepak Jasani (Head of Retail Research at HDFC Securities) said that this is even though defensives are not cheap.
He said that these sectors could provide downside protection if the markets fail to perform as they might fall more than other sectors or the market.
Vinod Nair is Head of Research for Geojit Financial Services.He says that strong sectors such as pharma are experiencing solid consolidation.
FMCG and telecom are also good.The long-term outlook for IT has been stable and has gone through a period of time correction.
Nair stated that new growth, as well as theme sector sectors such renewables and electronics like textiles and chemicals, look promising on a long term basis.These are all settling for high valuations.
Investors will also be keenly interested in other areas such as power, real estate, infra and capital goods.
Sunil Nyati (Managing Director, Swastika Investmart) stated that the turnaround story in real estate is after 10 years’ underperformance.
The last five years have been very difficult due to demonetization, NBFC crisis and RERA.But things look very bright now because of low interest rates, stamp duties cuts, supportive policies, government policies, and consolidation within the sector due to RERA.
Nyati said that power, capital goods, and infra are also emerging from 14 years of “Vanvas”, and markets have begun to celebrate this.This is expected to last for the next few years, because of valuation comfort and a strong growth outlook.
However, the future may see financials, aviation stocks, and auto metals lose popularity.
Markets all over the globe are trading at an unprecedented high level, with most economies trying to return to pre-Covid levels.
One can also avoid the auto sector, because all around the globe, there is a chip shortage, and the supply might not be sufficient to meet demand until the first half of 2022, or the first half 2023,” stated Gaurav Garg of CapitalVia Global Research.
Garg said, “Second, is the aviation industry, which continues to struggle to make a comeback.Especially with many countries still placing bans on others, which might be observed until there is clarity on the new mutation.”
Jasani noted that sectors such as financials and auto can continue to underperform even if investors shift their portfolios towards emerging stocks or safer ones.
Contact Rohit Vaid at rohit.v@ians.in
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