SECTORAL OUTLOOK 2020 THE GOOD BAD & UGLY

It makes tremendous sense to increase appetite for equity when the stock prices fall. However, it is easy to get confused or even totally lost while deciding which sectors to focus on in such a crisis-driven situation. For sure all sectors are negatively impacted; however, some are impacted more than the rest. The DSIJ Research Team shares the outlook for various important sectors that will prove to be gamechangers for the economy

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Unprecedented is the word that most easily comes to the mind of any layman or expert when asked to describe the current crisis. But while some are simply wringing their hands, smart investors are already doing their homework and sensing an opportunity to park their excess monies in the equity markets. While identifying opportunities in the market, a hunt is on to predict which sectors may do well and which may underperform. Sectoral allocation and exposure is the key to portfolio performance. Investors overweight on banking in 2020 may have underperformed the key benchmark indices while investors overweight on pharmaceutical and FMCG may have outperformed the markets.

Says Ratul Chaudhary, a seasoned investor: “Betting on the right sector is most important and hence investors should spend quality time on analysing which sectors may do well. I remember having being stuck in telecom stocks for over 6-7 years with no gains. I had invested nearly 10 per cent of my portfolio in telecom. If the sector preference goes wrong the portfolio performance is impacted negatively and one may never be able to calculate the opportunity cost of investing in the right sector.”

In the current crisis situation, the fundamentals of several industries are shaken and the prevailing uncertainty is making it difficult to analyse the trend in earnings and business sustainability. Under such circumstances it becomes essential that investors give more importance in understanding sectoral outlook for the most important industries that will provide the required triggers to drive Indian economy ahead.

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