2023: Sectors to look forward to

According to experts, as an investor you should always try and stay in the sectors, which are most likely to reap benefits due to the government policies, changes in the trend and economy's revival. India's market faced an unpredictable and volatile year in 2020. The coronavirus pandemic has left a lasting impact on several sectors due to structural changes, like the energy, automobiles, pharmaceuticals, banking, telecom, IT sectors, real estate and hospitality.

Sectors to keep an eye on:

The previous year's top performers are always likely to retain their position the coming year and sectors, like Healthcare/Pharma and IT sectors gained profits over 50%. Underperformers of last year could bounce back due to the revival in the economy, like the Banking Index. Here are few of the sectors on which you need to keep an eye on:

1. Telecom -

There is a chance of tariffs facing hikes in the future. This is in order to improve the industry's financial health or ARPUs (Average Revenue per User). It could be either market-driven or regulator-driven. FTTH or Fibre-to-the-Home, high usage of data after the Covid-19 pandemic and businesses dealing with Enterprise Connectivity are on their way to becoming the latest growth engines.

2. Financials like private banks and HFCs -

In the previous two months, the sector of financials has seen a rebound due to numerous reasons like efficiency in improved collection, clarity over credit costs that are favourable, capital ratio that is healthy, various fundraising activities, increased provision of coverage ratio and much more. Under IBC or the Insolvency and Bankruptcy Code, there will be a boost with programmes like asset resolution and a noticeable improvement and sound growth in the credit cycles, which the banks will undergo. Further, the improvement in the real estate sector will likely help the HFCs or housing finance companies.

3. Automobiles -

In the last few months, the companies under the automobiles sector witnessed a bloom due to the suppressed appetite and festive demands. The Tractor segments, PV and 2W all saw a healthy traction in 2HCY20. There is an expected rebound in export volume, 3W and CV by brokerage firms. Additionally, the requirement to own personal transports during the pandemic and the need to social distancing added in the volume. The recent policies of the government should also lend a hand in continual growth in this sector.

4. Pharmaceuticals -

The pharmaceuticals sector saw a sharp turn owing to the pandemic, proved to give substantial returns and turned to be the investors' saviors in 2020. This sector should probably continue to bloom, as there is a least scope in pricing pressure since National Pharmaceutical Pricing policy already covered most molecules and there is an unlikelihood in anymore price cutting for products that are generically Indian.

Additional Read: An overview of well performing industries in 2020

5. Real Estate -

The comparatively low interest rates circumstances, discounts, developers offering numerous SOPs, cutting of the stamp duty by many state governments was the leading force in the ongoing traction that was received by the real estate sector. This is believed to be able to be sustained in 2023 as well. There has been an increase in joint or consolidatory developments after the RERA implementations and liquidity crisis encountered by various unorganised companies under the sector of real estate.

6. IT sector

The year of social distancing or 2020 saw a change in consumer behaviour with a rise in the adoption of android or smartphones and high speed of internet. Presently consumers prefer to buy products virtually through an app in the smartphone rather than any physical transaction. This has led to an increase in the technologies that are new-age and is believed to be the inception of the transformation phase of the technology over years. The first phase saw the establishment of a foundation that is cloud-based by enterprises and is still anticipated to grow. The second phase is believed to be the phase where there will be growth in technologies that are ancillary like 5G, IOT, AI and robotics.

Additional Read: How you can take advantage of India’s digital wave

Conclusion

After going through an uncertain and strained year, the market and the economy of various regions and sectors will likely be much different from the years before. Looking ahead to the year 2023, there are sectors that will gradually gain momentum, already have gained momentum and others that have lost the pedestal. You have to be very careful before investing and keep several things in mind as the market keeps fluctuating.

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