One of the things that wealth managers and other experts are at pains to point out is that for a healthy financial portfolio, investment in equity is a must. While instruments such as fixed deposits may keep money safe, they do not help money grow. However, the risk-averse among us, are still unwilling to repose faith in the stock market – particularly with the past year having been as tumultuous as it was. So what does 2021 have in store for us? Experts have some positive predictions for the stock market in 2021:
Though the economy contracted over the last year, the Nifty did markedly better. It saw an overall 10% return. On the last day of 2020, the Nifty reached the 14,000 mark for the first time. Most brokers predict that the Nifty it set to rise by about 15% in the year to come. When the Economic Times polled brokers, fund managers and analysts, they expressed the view that investors should stay invested for the time being since this Bull Run is likely to continue for a while. It is expected that the mid-caps will outperform the Blue Chip stocks in the year 2021.
Experts have pointed out, that governments all over the world are working to inject liquidity into the market and cut interest rates and that this will help stimulate the world economy. Another aspect that bolsters the positive outlook is an uptick of activity in the property sector. Discounts, lowering of stamp duties in Mumbai and low interest rates have increased property registration and overall number of property deals. While there could be volatility in the near term and even a temporary correction and consolidation period, all this will likely lead to a more sustainable bull market.
Companies such as China Mobile, China Telecom Corp, China Unicom Hong Kong will be delisted on the New York Stock Exchange. This is because of their known affiliation with the Chinese Military. More than one expert has observed this move away from a China-centric investment strategy. On the other hand, Indian equities figure in the top five emerging equities for this year according to a Bloomberg survey.
According to Gautam Shah, Founder & Chief Strategist, Goldilocks Premium Research IT and FMCG will be the two main sectors to concentrate on. According to Shah, 2020 saw a structural breakthrough that will result in gains of between 20 and 50% for largecap IT stocks. As for FMCG stocks, these are also likely to do well on the back of a two-year consolidation period. He predicts gains of up to 25% in this space; recommending stocks like HUL, ITC, Marico, Nestle, Colgate, which he believes could be the star performers. Like other experts, Shah also believes that the bigger gains are to be made in small and midcaps.
Ravi Dharamshi, CIO, ValueQuest Investment Advisors is of the view that things look very rosy for Indian pharma companies including companies that deal in generics. It isn't just the COVID 19 vaccine proposition that predicts a rise in pharma stock prices, but also the fact that there is a huge international demand for generic Indian meds. Dharamshi points out that every fourth pill that an American pops, is made in India. He expresses the view that he is bullish on the pharma space for the next three to four years. So clearly the pharma sector – particularly US market-focused companies – is another space that investors could confidently look at for secure investment opportunities.
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