Budget 2020 & Investment Opportunities
Every time I meet Stock market enthusiasts, they always end up asking the same
question, “What is the best time to invest?” The best answer to this question is given by the
legendary Warren Buffet – “The best time to invest was 20 years back and the next best time
Budget Day (Feb 1, 2020) is just round the corner and presents us with new
opportunities. India is a growth story and we are witnessing continuous growth in the stock
market in few selected large-cap stocks but when we talk about mid-cap market or for a
majority of the stocks the sentiment has not been that bullish. So let me take you back to
January 2018 when the picture for the mid-cap segment was not at all rosy. The mid-cap
market has been going through a correction since January 2018 and it lasted for almost two
years and ended in August 2019 (August 23, 2019, to be precise). Post the correction we
are now heading towards an uptrend.
So, from an investment purpose or to create a portfolio or to reshuffle the portfolio it
would be advisable to have only 30 – 40% of your total equity exposure in mid-cap. The
remaining 60 – 70% can be put into a better profit-making stock.
When we talk about sectors such as Steel, Pharma, Auto etc, all of these are
following an uptrend and are likely to offer better returns.
Let’s now focus on one sector at a time beginning with the metal sector which was in
a correction phase since many- many years. However, since August 2019 we can see that it
is showing an upward trend. Tata Steel and JSW Steel are mainly the hot picks for this
sector. Similarly, cement stocks such as UltraTech Cement, ACC cement or Shree cement
have a very good potential. Two other sectors that need to be mentioned are shipping and
ports and infrastructures.
When we talk about the Pharma sector, it was in correction mode since April 2015
but it now is on the verge of recovery. So, I feel that post-March 2020, the Pharma sector will
see a good growth. Stocks to watch out for in the Pharma sector are Divi’s Lab, Biocon and
The next sector in focus would be the Auto sector. Since May 2018, the auto sector
has been performing badly. However, it is now recovering & it may resume its uptrend. The
stocks to watch out for in this sector are Maruti, Bajaj Auto and Eicher motors.
Insurance sector since the previous budget Feb 2019 is outperforming the Nifty and
the journey would continue this year as well. The stocks to watch for are SBI Life, HDFC Life
and ICICI Lombard.
The growth story of India would remain incomplete without mentioning the banking
sector. If India Inc has to perform in 2020, the banking industry must outperform Nifty50.
Before ending, I will go back to the Mid-cap segment with which we started this
article. In this article, I am not any specific Mid-Cap stocks for investments as the stock
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