Investment Tips: Top Sectors to Consider During the Current Scenario

Peter lynch says “you get a recession, you have stock exchange declines. If you don’t understand that’s going to happen, then you are not ready, you won't do well in the market”.

Why are we talking about economic and stock market decline? Last year the whole world came across an unpredictable situation where the whole world went in lockdown, coronavirus pandemic was so dangerous that cases were increasing and there was no cure to it. To stop the cases from increasing, the sudden lockdown was imposed.

During lockdown around 4.9 million Demat accounts were opened, 22.5% increase from previous year. The sudden lockdown forces individuals to consider their secondary income and urge them to invest in the stock market, where most accounts are inactive, possibly for knowledge, time, money, etc. Before we talk about this, let's start with the economy and the sector to make investments taking into account the current situation.

Let's start with the definition of the economic cycle, which refers to the economic transition from growth to recession and the return to growth again. This is one of the most influential forces in the stock market. The economic cycle is important because it plays an important role in determining the earnings of companies, which may be the single most important factor affecting stock prices.

The stock market is very sensitive to the different stages of the economic cycle. Some industries may outperform the market during economic growth, while other industries may outperform the market during an economic recession.

Coming out of a recession, one of the first sectors in which investors generally move or rotate is finance, which includes companies such as banks, brokers, and insurance companies. Towards the tail end of recession interest rates are usually favorable for businesses such as banks. Investors turn to finance When Recovery Prospects.

Pharmaceuticals:

Given that healthcare is a key area of focus (post-COVID), not only in India but also around the world, the pharmaceutical industry is expected to grow. Multinational companies provide China with a discount of nearly 50% on the approval of their drugs in the Chinese market, which can create more opportunities for Indian pharmaceutical companies.

It is estimated that 60% to 80% of the world’s population will be vaccinated this year; it provides a huge profit and loss space for pharmaceutical companies, and Indian pharmaceutical companies as suppliers will also get a share.
Therefore, at least in the next few quarters, investment in this industry is expected to gain good momentum. It is recommended to invest in large-cap stocks, while mid-cap stocks are in a transitional period. Mid-cap stocks are also experiencing a boost, but large-cap stocks will be the first choice for the new quarter.

IT/Technology Sector:

With the increasing popularity of smartphones and high-speed mobile phones, the IT/Technology sector is already on the rise. With the concept of social distancing and working from home, COVID 19 is increasingly arousing consumer demand. Consumers now prefer virtual transactions through apps or online banking, rather than physical transactions.

All these have led to the development of technology in the new era, which is expected to grow at a compound annual growth rate of 16% and will usher in multiple stages of technological transformation. This is also reflected in the performance of the IT stock market. Investors looking for long-term growth and resistance to inflation should consider investing in this industry. The industry will continue to grow and affect the overall performance of the market.

Steel -

For many years, domestic steel companies have focused on import substitution and export promotion. The expansion of the PLI (production linked incentive) program to specialty steels provides further push to achieve this goal. Under the PLI plan, it includes coated products, high-strength steel, alloy steel rails and bars.

The plan will also help national companies improve manufacturing capabilities and develop new products. Specialty steel is mainly used in automobiles, railways, and other fields, and this year it may offer consumers good investment options.

FMCG-

The nationwide lockdown and supply chain challenges have caused panic among consumers in 2020, especially when it comes to necessities. after the second wave, the third wave does not seem to go away any time soon, consumers can begin to accumulate essential products. The uncertainty surrounding the third wave of the future may lead to higher consumer spending on basic necessities, which will boost the sales of fast-moving consumer goods companies.

Chemicals-

As global investors are pulling out of China and seeing India as a potential market, the industry can also offer a very good investment option. India's global market share in this field has increased, indicating a bright future for the chemical industry. Many large chemical companies are investing in expanding production capacity. In recent years, chemical stocks have also increased considerably, making them one of the most profitable industries.

Warren Buffet is an active investor. He recommends a passive investment method, that is, you buy a stock that represents the wide diversification of the entire market. This is the main idea that appears every year, and then you continue to buy in the market. the pleasure of investment is taken away, you should not choose the right time, you should not choose the right company to buy, but the general marketing they recognize will be in every year It appears over a long period of time, which means you will average the average return of the market.

If you are someone who can not put emotions out of investing, then the passive investing method is for you. It takes the psychological factor out of your investment and eliminates the need for the right temperament, "You don't have to worry about which stocks to buy, you do have to worry about which day it will come in and out." give it time, it will still produce good results.

This is the second major successful investment event. You need to set aside enough time for miracles to happen. There will be nowhere to go in the market for a while, but if you give it time, it will bring you big profits.

At this time, investors must continue to invest in good companies, companies with good balance sheets and companies run by market leaders because they are unlikely to survive the storm. In addition, investing in stocks without asset allocation or without maintaining a separate debt portfolio is speeding like no brakes.