The elections are over, Modi is PM and markets have gone up. Now what?
Now it comes down to where you should invest in. One of the biggest opportunities you will find is looking in places where the Government wants to make things right. The mistakes of the past and the bottlenecks to growth are where the Modi Government will attention to. Ample evidence of the Government's focus areas was on show in its maiden budget.
So where does the Government want to invest?
The Budget was not a blockbuster, nor was it populist but it set the right notes to kick-start growth. Capital investment in the country has not really recovered after the financial crisis of 2008. The global slowdown, complicated regulatory requirements, land acquisition headaches and tough environmental clearances put on backburner any fresh capital investments India Inc wanted to make. Without such investments, entire capital goods industries withered. With the Government's attention now, better days are likely ahead.
For any growth to sustain, it needs proper infrastructure. Roads, highways, ports and rail connectivity therefore have become one of the biggest beneficiaries of Government spending.
Real estate, sanitation and city infrastructure services have fallen far short of demand and quality. The Government wants to correct this. It will invest in making cities smart by utilizing technology to streamline infrastructure services. A slew of other measures are expected to provide a much needed boost to the sector.
Finally, India can become a tourism magnet. It has a lot to offer in historical destinations and the various holiday destinations. But when was the last time you saw an advertisement inviting you to Dehradun or Dalhousie or Coorg? The sector is now set to get the kick it has not got for decades.
Why should you invest where the Government's putting its money?
That's because these are sectors that have been languishing for many years and the Government incentives are expected to bring in fresh investments by private players, create more jobs and add to economic growth. These companies then stand as winners.
Don't expect the following stocks to become overnight outperformers. Some like BHEL and Engineers India will bleed more. But all of them count among the best in their fields and stand a very good chance of being key beneficiaries of Government's attention to their respective sectors. In the meantime, they'll keep chugging along.
We recommend the following sectors for this market: