What will be the next booming market in the investment landscape?
Most periods of large economic distress are followed by economic booms. This was evident after World Wars I and II and more recently, after the Asian economic crisis of 1997 and the American housing induced crisis of 2008. In the midst of the horrible pandemic in India and many other parts of the world, with vaccinations at a slow pace, it is hard to imagine an economic boom in India but that is exactly what we expect in the not too distant future. Most periods of large economic distress are followed by economic booms. This was evident after World Wars I and II and more recently, after the Asian economic crisis of 1997 and the American housing induced crisis of 2008. Nifty and Sensex are flirting with all-time highs even while near term GDP projections are slashed. We believe this market reaction is rational, given the expectation of a strong economy to come. Loose monetary and fiscal policies around the globe and in India further support the continuation of buoyant markets. The Spanish Flu Pandemic of 1918 (which by some estimates killed 5% of the Indian population) was followed by an economic boom known as the Roaring 20s. We expect something similar, post the Covid Pandemic. Travel and tourism  Due to Covid-19, if one industry has been affected the most, then it is travel and tourism. People have been starving to step out of their houses and travel for more than a year now. This is one sector that is waiting to take off as soon as the pandemic subsides! With more than 37 world-heritage sites, multiple attractive beaches, and over ten biogeographic zones, India has one of the worlds incredibly diversified geographies! The natural beauty of India, along with the support of the government policies such as Swadesh Darshan and the multiple caravan camping by the Ministry of Tourism, is undoubtedly paving its way to a boom in this sector. Indias tourism sector is anticipated to grow at 6.7% by 2029, and international tourists are expected to reach 30.5 million by 2028 according to IBEF. It is expected that the sector, after reviving from the pandemic, can earn the economy a whopping $50 billion by the end of 2022. Tip: So, investing in the Indian travel and tourism sector now could be a wise investment decision. We particularly like names focused on travel technology, such as travel booking, ride-sharing and hailing, price comparison, travel advice). Commodity and alternative energy  The last commodity supercycle was in 2007 and we believe we are in the midst of the next. This is a byproduct of the global economic boom. The renewable energy market is also expected to boom further after the pandemic is over. It is anticipated that around 55% according to IBEF of the total installed power capacity will be through renewable energy by 2030. Non-conventional energy resources have gained popularity and have received foreign direct investment. It is ranked in the 3rd position in the world, as per its potential to generate renewable energy. As per reports, the renewable energy sector of India can witness an investment of around $500 billion by 2028. The government is planning to increase the renewable energy capacity by 500 GW by 2030, which is another boost for the sector. The recent target for 2022 is 227 GW, which has been further ramped up. Tip: Invest in commodity stocks such as Copper, Iron Ore, energy, Real Estate and the renewable energy sector. Fintech Industry  We have the fintech industry next on our list for global investment opportunities. The global fintech market is booming and is expected to reach around $309.98 billion by the end of 2022. The CAGR of this sector is expected to be around 24.8%. The Indian fintech industry is the second-highest funded industry in the economy after e-commerce. In fact, it is also one of the largest fintech markets across the globe. The total investment grew above $10 billion in just 4.5 years from 2016 to the first half of 2020. Amidst the pandemic, this sector witnessed a 60% increase in investments which is commendable. There have been about 4 unicorns in 2021 from this industry. Tip: So, if you are looking for a healthy yet diversified portfolio, which would be beneficial now as well as soon, then fintech stocks should definitely be a part of your portfolio. Artificial Intelligence  AI or artificial intelligence has overtly grown all around us. With targeted marketing and customized social media feeds, we have been engulfed with AI with or without our awareness! In fact, it is expected to grow by $957 billion by 2035, which is around 15% of the countrys current gross value. AI can evolve and benefit multiple sectors such as manufacturing, technology, finance, and even help in the prognosis of diseases. Tip: The fund managers are surely looking forward to investing in this futuristic technology, and your personal portfolio can be ahead of the curve by doing so as well. Biotech and Genomics  The Pandemic has shown the need for transformative, cutting edge medical technology to keep us healthy and protect humanity from future diseases and pandemics. The pharmaceutical industry in India stands to benefit. It is amongst the worlds largest, expected to grow to $100 billion by the year 2025 according to IBEF. Tip: Invest in innovative Biotech and Genomics names within the larger Pharmaceutical industry  Infrastructure  In the year 2022, India is expected to be the third-largest market for infrastructure and construction. Around $777.73 billion investment is awaiting at the door for this industry which will be used for sustainable development projects in the country. Tip: If you are looking for a diversified portfolio, there is no way you can miss the infrastructure industry. Conclusion  A post-pandemic rebounding economy should see various sectors of the market outperform others. We urge investors to position their portfolios accordingly as the overall market itself may not produce stellar returns near term given that markets are already at elevated levels. by, Soumyo Sarkar, Financial Advisor, Fintso and CEO, Sumit Capital. (Ex-Wall Street Fund Manager)