The Indian economy is on the verge of diving into the next leg of its growth story after its strong outperformance in 2022. Money managers across the board believe new sectors will be at the forefront of this economic dominance.
Takeaways from the Crystal Gazing Summit and Awards 2023, organised by PMS AIF WORLD, suggest most money managers are of the view that banking and financials, along with manufacturing, will be the key themes of the next decade.
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With a focus on financial inclusivity, the banking and financial sector is expected to grow by leaps and bounds in the coming decade. That market voices are equally bullish about both private and public sector banks is a positive sign.
"Indian banks, from both the public and the private sector, will unlock a lot of value in the coming decade," said Anirudh Garg, Managing Partner, Invasset PMS (portfolio management services) at the event.
"Banking and financial services will be a compounding business, growing at a rapid speed in India's capital-starved economy. The sector is likely to reap the benefits of higher credit growth, low credit cost, stronger return on assets, and stable net interest margins," said Dhiraj Sachdev, Managing Partner and Chief Investment Officer, Roha Asset Managers.
"Nonetheless, investors should still be selectively focused on lenders that have strong business models as these will be the major wealth multipliers in the next 10 years," Sachdev added.
Apart from financials, India's manufacturing sector is also expected to be a frontrunner in the coming decade. The bullishness for the manufacturing theme arises from India's strong push towards Make In India and the government's initiatives to support industry through production-linked incentives.
Anil Rego, Founder and CEO of Right Horizons, a financial advisory, believes that Make in India, coupled with the need to look for alternatives to manufacturing in China, can act as growth multipliers for the sector.
Sachdev believes that these factors will not only boost the manufacturing sector, but also trigger growth across the economy. "Capital goods, pharmaceuticals, chemicals, engineering goods, auto components, electronics, semiconductor components are sectors that will be key beneficiaries of the manufacturing push," Sachdev said.
Sachdev also sees huge growth potential in retail, travel, and housing, the sectors that are expected to grow along with India's urbanisation, which is still at lower levels compared to many other countries.
For Garg, public-sector enterprises also hold huge growth opportunities. "The segment has been neglected in the last decade and there is some catching up to be done here. The segment has an immense asset base which can help unlock India’s growth potential," he said.
Meanwhile, sharing his outlook for new-age technology companies, Rego said he feels new-age technology companies still have a long way to go.
"I am not so positive about new-age tech companies currently. Despite their recent correction, the companies still need to showcase earnings growth visibility before they can be deemed worthy of investment," Rego said.