Elections Are Over: How To Pick The Right Sector To Invest In?

When a new government is elected in India, investors often reassess their strategies to align with the anticipated policy changes and economic directions. Investors usually remain vigilant and adaptable, closely monitoring policy announcements and economic indicators to fine-tune their investment strategies in response to the government’s initiatives.

S Ravi, founder, Ravi Rajan & Co., shared that most policies are expected to continue as the NDA is continuing the government at the centre.

“Prime Minister Modi is in his third tenure as the Prime Minister, which implies that most of the policies framed in NDA one and two would continue. The Prime Minister in his allocation of the portfolio of the cabinet has preferred continuity to a large extent. This implies that most of the vision documents including Viksit Bharat would be relevant in today’s context,” Ravi said.

Ravi added that NDA 2 had focused on e-mobility, infrastructure including rural infrastructure, ESG, Defence, and IT infrastructure.

“Indian banking has been well capitalised and strictly regulated. Steps were taken in the case of PMC Bank, Yes Bank, and Laxmi Vilas Bank. RBI is closely regulating NBFCs, Arc, and cooperative banks,” Ravi highlighted.

Looking into the future, Ravi said that the focus will be on good governance and strong regulatory measures.

Ravi, who is a former chairman of the Bombay Stock Exchange, has suggested key focus areas on how to pick the right sector to invest in going forward.

• Banking stocks especially PSU banks will attract investments considering the fact they are well capitalised with good capital adequacy and growth in balance sheet size.

“We have to also understand that banks that have merged will now show more profitability and resilience,” Ravi said.

• The insurance sector will do well as India has opened up this sector by increasing FDI. Insurance for all initiated by IRDA will see an increase in reach. The regulator has allowed listing is a forward-looking measure.
• Infrastructure companies that are in very technical construction like tunnels, roads, airports, and ports would do well as there is a vision to connect India as per Gati Shakti’s vision. Railways and allied services would also see a huge upsurge.
• Defence is another area that has opened out and has huge prospects.
• In the IT and software space, there is a lot of potential for cyber security as this will be an area of immense importance considering that online business and frauds are increasing. Data protection will be the key as data security is highly vulnerable.
• Building and construction companies will do well as they are more regulated after the introduction of RERA, FMCG, agri, logistics, and transportation companies will do well.
• PSU manufacturing companies especially in heavy engineering would be an interesting watch.
• Pharmaceutical companies with international distribution would be good for investment.

The union budget is around the corner and it will certainly clearly outline the policies of the new government, Ravi concluded.