Saturday, January 1, 2011
WHICH STOCKS TO INVEST = 2010 VS 2011= A REVIEW
2010 VS 2011= A REVIEW
This Blog greets all the readers a very joyful and prosperous New Year, full of successful, new initiatives, in 2011.
The year 2010, that went by, was also good by any standard. India did not succumb to any of the Global turmoils and weathered all of them successfully.
USA has almost succeeded in coming out of its problems caused by the financial failures of 2008 and 2009. It is likely to perform well in 2011.
Europe caused some stares. But, by all indications, it is coming out of its problems in 2011.
China is rising as a financial super power very fast. But then, its low cost economics seem to be scaring / hurting local industries in other countries to an extent.
As the world economy integrates more and more, such problems are bound to arise in one part of the world or other, all the time. The initiatives of every country will cause surplus at one place and suffering at another. The overall balance must be – a few steps forward, if the governments of all countries act with foresight. We do hope, this will happen in 2011.
Every country must strive to achieve a win-win situation in its economic and social relationships with other countries. This only can secure a just world economic order and reduce the economic turmoils happening at various places periodically.
India is grappling with its developmental issues and needs to sort them out quickly and sensibly. The environmental issues in particular need careful attention. Development and environmental issues are not really antithetical to each other but may look so, when we look at each of them in isolation.
Coal, iron ore, copper ore and any other ore will be deep under the forests. Huge gas reserves will be deep under river beds or sea-bed. This is bound to be. Let us look at it in this way :
Forests grew where the ores are. Rivers formed on the Gas reserves. This can’t be helped. Ores can’t be re-located. Gas reserves can’t be re-located. But, we can relocate forests and we can extract gas without disturbing river beds – if we have the conviction to have DEVELOPMENT and ENVIRONMENT both.
I think, our effort must proceed on these lines.
2010 was good for many sectors in India. IT sector, Auto sector, Pharma sector and Banking Sector flourished well. These will continue to perform well and grow well in 2011.
Infrastructure sectors began their upward journey in 2010. These are likely to acquire full speed in 2011 and 2012.
Telecom sector firms are in growth mode in terms of subscriber numbers but not in financial terms. Whether 3 G and Broadband penetration can take them back to good financial numbers is to be seen in 2011. Government needs to ensure that the Telecom scams are properly resolved and are not allowed to hurt the telecom Industry in any way.
Currently, Indian Telecom firms led by Bharti are looking at international M&As and becoming Global firms.
Telecom Manufacturing sector is however very sluggish in India, compared to China. We still depend too much on foreign suppliers for telecom equipment. This is very unsatisfactory and must change quickly.
Oil and Gas is full of promise. But, it depends on new finds a lot.
The WEAKEST LINK in India Inc appears to be its abysmally low R&D expenditure. This is uniformly true of most of the industry sectors. The only exceptions seem to be Pharma and IT software companies, which are coming up with new products slowly but regularly. Given this strength in Pharma and IT software sectors, these sectors can outperform other sectors in the long run.
Banking has been a steady performer in 2010 and will continue to perform well in 2011. This includes both private sector Banking and public sector Banking players. Both are in very good health. A 20 percent growth seems to be very easy for most of the players in this sector.
FMCG can grow well in 2011. The world economies are out of the blues mostly and world spending on FMCG products can grow up steadily again. India may spend proportionately more in 2011 compared to 2010.
What sectors can Indian Investors bet on, in 2011 for safe and fast Growth?
2. IT Software
4. Auto mobiles (2 / 3 / 4 wheelers)
6. Infrastructure (Roads, electricity etc)
Barring any unforeseen events, Indian economy is growing at a good rate and 2011 is likely to prove to be a BIG SUCCESS for Indian investors.
Indian DIIs and MFs must try to attract Indian retail investors in much larger numbers, by ensuring attractive, net take home returns for them. At the moment, there is more concentration on attracting agents and other intermediaries.
We must realize that AGENTS in the ultimate analysis are NOT INVESTORS. If INVESTORS are scared by low or no returns, Agents will be of NO HELP whatsoever, in the long run. The total focus of all the people in this game must be on benefitting the ultimate investor. If that happens, every one will benefit. But, if the bigger pie goes to the MFs/DIIs and their Agents, the investors will never return to stock markets. Unfortunately, this has happened too many times in Indian stock Market.
The same thing holds true for primary market. Companies must ensure that the Investor has a profit when their securities are listed. Then, he will invest again and again. The goal of the Indian stock market must precisely be to attract EVERY INDIAN to the stock market and to ensure that he gets FAIR PLAY from every market player. All regulators like SEBI and IRDA must constantly be looking at this aspect.
Overall, 2011 promises to be GREAT YEAR for the stock market investors in India.
This Blog wishes all Market participants a very happy new year,2011.
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