The moment of truth for investors: Will earnings expectations be met in 2018?

The broad fundamentals are expected to look up on the back of improving macroeconomic factors with recovery led by consumption, followed by public sector capex and external demand improvement, benefits of reforms percolating to the ground level and conducive inflation/interest rate environment.

While we expect the markets to continue with their upward trajectory over the long term, there would be some aberrations due to global and other uncertain events.

But, as seen many times before, Indian markets have been quick to recover as the domestic growth story remains intact.

One of the key tailwinds of growth for the organized players are the benefits that are expected to trickle in, following the implementation of GST.

Not only would this allow the large players with more resources to benefit, but will also increase their pie with their smaller peers finding it more difficult to operate and keep up with the times.

These very traits, combined with the fact that India’s spending habits have seen a drastic change in recent years, only makes us excited about the broader consumption theme.

With more money in the hand of people, higher discretionary spends and the gradual move towards premium products, has shown some transition in the buying patterns of the country’s citizens.

This is one of the key themes within the consumption realm, which we believe can only snowball with time.

Within consumption, it can be broken down into multiple ways – all of which become interesting plays – such as affordable housing (lack of housing), building material (beneficiary of focus on housing as well as home improvement spends), consumer durables (GST benefits and low penetration levels).

An interesting category of consumption is the auto space. But given the limited number of investable OEM options, the auto ancillary section becomes a good place to search for ideas; especially categories where few players dominate the market.

In addition to this, the Government’s focus on enhancing the livelihood of the farmers, coupled with the reform initiatives taken by the Government, is bound to bring about drastic (positive) change in the agri space. This is another interesting category we believe will allow investors to find good wealth making opportunities over the long run.

Disclaimer: The author is Sr. President and CEO, YES Securities (I) Ltd. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.