The big question is about the investment themes for 2021. We entered the year with the Nifty at 14,000; so a degree of caution is inevitable. Here are 4 themes that can make a veritable splash in 2021.
War against COVID
This is going to be the big story of the year 2021. The war against COVID has already started with inoculations against COVID already commencing in many of the developed markets. India and most EMs will follow suit. This could open the doors for a number of candidates. This includes manufacturers of syringes, capsules, vaccines anti-COVID drugs. They will be immediate beneficiaries. Then there could be a plethora of support services like airlines, logistics companies and cold storage businesses that would benefit from the COVID war effort. Keep an eye on these names.
COVID – Last mile support
The COVID war effort will not be just about cities but about smaller towns and villages. The big challenge will be last mile distribution. The government will look to leverage every possible last mile network including PSU banks, regional NBFCs, MFIs etc. For all these players, the COVID war will open up a new revenue frontier and that could be large and lucrative too. Many of these may be smaller companies and hence the war on COVID may be significant for them.
Financial services boost
One argument is that the war against COVID could lead to a recovery in GDP growth and that will boost banks. That is bound to happen but there is a larger BFSI story. Insurance companies are likely to benefit as we are already a witness to higher propensity for risk covers. These range from life covers to accident covers, to health covers to critical illness covers. In short, the under-penetrated insurance sector could get its first big boost post-COVID. In addition, COVID will also lead to a greater focus on long term saving products like equities. So listed stock exchanges, listed demat providers and even listed AMCs could experience a bounty in the next few quarters; thanks largely to the shift caused by COVID.
Atma Nirbhar Bharat
We have seen a number of large global players like Suzuki and Hyundai looking to diversify their China bets. Hyundai has already started the process as has Apple. We have seen some of these outsourcing stocks more than double during the year but this could just be the beginning of the trend. Year 2021 could really reinforce the outsourcing story triggered by the Atma Nirbhar Bharat program of the government. Even PSUs with surplus capacity may finally find a lucrative outlet for all their value hidden in assets. This could be the biggest thematic story of year 2021! ©
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