What to Buy, What Not to Buy in the Tempting Bull Market
It is broadly agreed that Asia is going to be the next Global center for Economic Growth. In the Continent, India has the attention of the Developed Economies that are looking for new investment and trade opportunities. The reason is no secret, India is a large emerging nation with growing middle class, leading to the huge investment and trading options. Along the line, there are some sectors that are leading the race with the highest growth, thus becoming the emerging sectors of the Street.
Real Estate: Government has made a very significant move for the sector with REIT. Although there is still a long way ahead, the move has surely grabbed the attention of the Investors. The sector is all set to yield magnificent returns. Realty is the high beta index for any country. It outperforms market every time by thrice the increase in the market. Also, while the Interest rate is expected to go down, why not grab a piece of the pie. Pick the best ones- DLF, Oberoi Realty, Sobha, Godrej Properties, Prestige, Sunteck and Jai Corp Limited.
Pharma : Last two decades have witnessed the double digit growth rate of Healthcare sectors in India. With the Health Insurance Sector at its nascent stage, there are multifold opportunities in the sector. Pay attention to Aurobindo Pharma, Sun Pharma, Cipla, Cadila, Divis Lab, and Glenmark.
Education: Even though the sector has been tasting dirt for now, it has a huge potential for the overhaul. The policies for reform in the sector are in the pipeline and they hold the key to the lock of the sector’s bright future. Everonn and MT Educare are the best picks.
FMCG: With the consumption at the National Level always rising, this is a sector one can always bet on. Recent reforms have put a lot of money in the hands of Government employees. This could add the significant boost to the sector. Moreover, the sector, for the most part, depends on rural population and the monsoon is going to be blissful. ITC, Britannia, Hindustan Unilever, Godrej, Dabur and Marico are the ones that go highly recommended for the sector.
Banking: Banking shares of both Public and Private sector recently stole the limelight when the NIFTY Bank Index touched 17 months high on NSE. Nifty Bank represents the 12 most liquid and largest Banking stocks. Bank on Yes Bank, SBI, PNB, Canara Bank, IndusInd, Federal Bank and Axis Bank.
On the other hand, the bull market could be very tempting, urging you to buy the current kings of the Street. They might be pretty tempting in the short run, however the long term investors must be careful. These are the few sectors the long term investors must be cautious of.
Metals: This sector is a risky bet, even though it is the second best performing sector of the current bull market. In the long haul, the demand and supply dynamic of the sector hardly change. The ongoing rally is just a temporary relief, but by and large if the global situation does not adjust itself, the Metal Sector in general will remain under the circumspect scrutiny.
Information Technology: IT has plunged in to an abyss. The IT giants have turned bearish. Brexit and the continued technological churn have made life difficult for the sector. The growth rate in the sector has leveled off and IT is on for the long-term downtrend. Investors will have to look for the booking profit in this space.
Construction and Industrial: India’s Economic Growth now hinges most on the consumers. There is no possibility of recovery in the CapEx cycle in near future, making the stocks in these two sectors a complete no-no. There is simply no strength in the CapEx side of the Economy and there is no rational ground for the recovery even in the next financial year.
The key to a yielding portfolio is a careful market study. One haste and everything could go wasted. When everyone is getting greedy, it’s the signal for putting the foot down and watch with eyes and ears open. Analysts on the Street recommend many stocks day in and day out, but it is important to know which stocks to buy for improving your earnings and which ones to avoid for averting the losses.