Sector-Picks 2018

 

What will be the key sectoral stories to watch out for in 2018?

Come year-end and the general question is, “What about markets”? This time will be no different. Let us look at 6 sectors that will be big stories in 2018

Agri-Sector – Well, the BJP is taking no chances after Gujarat. You can look for a big thrust on drip irrigation, agri-inputs, hybrid seeds, fertilizers, agro-chemicals, post harvest infrastructure, farm logistics etc. All these could become multi-bagger ideas in 2018. If you find one, just buy one. There is no option but to give a big thrust to the farm sector. After it is 70% of India.

Automobiles – This is one sector that is not going off your radar in a hurry. Be it tractors, passenger cars, HCVs, LCVs or even two-wheelers, they are all going to be hot ideas in the coming year. With GST and demonetization behind us, auto could see rapid rebound in consumer demand. A thrust to agriculture and more dole-outs to the middle class means that auto could be much in demand. Auto companies are also going to pamper the audience with a wide choice. Watch for an outperformer!

Chemicals – This is the next big sector in which India is getting to be globally competitive. Globally, chemicals are shifting towards a more generic model and Indian chemical companies are perfectly poised to capitalize on this trend. Specialty chemicals could be the in-thing as India is best equipped to cater to the rising global demand.

Commodities – Our reference here is to the industrial commodities. That includes aluminum, zinc, copper etc. On the one hand there are going to be production cuts in China and on the other hand Chinese demand for these commodities is likely to gather steam. That means demand will be robust and the prices of all these metals on the LME is likely to remain bullish. For those who are worried about the rapid rise in metal prices, the story could continue in the next year too. Forget about commodity cycle; the demand is likely to remain extremely buoyant in 2018.

Defence – If you are wondering what happened to defence stocks, year 2018 could be the answer. Look out for a big thrust to the Make in India program. The government is going to use the coming year to give a big boost to in-sourcing defence requirements to the extent possible. Established companies in the defence sector could have a good time with rapid order flows. It will not necessarily be the largest and the best capitalized that will thrive. In fact, it will be the one that is most adaptable!

Broking Houses – You may be surprised, but watch out for brokers. As India undergoes a billion dollar shift towards greater participation in the equity markets, the big consolidation phase may be just starting out. The fittest brokers may see their revenues and profits growing manifold. They could be the dark horses of 2018! ©

 

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