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Trend Spotter: Power, tourism sectors show potential for exponential rise
"IT sector has seen tremendous growth in the last two years since the lockdown as more and more companies move towards making themselves digitally equipped to tackle any such situation in the future," said Vijay Dhanotiya, Senior Research Analyst, CapitalVia Global Research
With India's economic recovery catching a faster pace, the next multibagger stocks might emerge from sectors like power, tourism, realty and IT sectors.
Lately, banking, PSUs and even the stocks of brokerage firms have shown an upward trend.
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However, steep valuations have somewhat subdued investors' interest, said industry experts.
Nonetheless, an accelerated economic recovery has boosted demand for sectors such as power and tourism.
Consequently, stocks of companies in these sectors hold potential for giving future healthy returns.
"IT sector has seen tremendous growth in the last two years since the lockdown as more and more companies move towards making themselves digitally equipped to tackle any such situation in the future," said Vijay Dhanotiya, Senior Research Analyst, CapitalVia Global Research.
"We have also seen strong demand environment, sustained margins and improved cash flows which is expected to continue and hence we believe it will be one of the outperforming sectors in the market."
Besides, he cited power sector stocks to hold great potential.
"Indian power sector has seen outstanding demand growth and India has become the fourth largest energy consumer in the world. Power sector has also seen growth due to the government policies as well as the demand increases.
"Indian government has allowed 100 per cent FDI in the sector and has allowed the private players to enter the market. The sector is seen as one of the top outperforming sectors as the demand of energy is sought to increase at an unprecedented pace."
Furthermore, MOFSL's advisory subsidiary Teji Mandi, CIO Vaibhav Agrawal said that travel and tourism sector is expected to "do well on account of the opening up of the economy and revenue consumption".
"Even real estate as a sector is at an inflection point on account of low interest rates, tax savings on buying houses and increase in people's affinity to buy houses."
"Furthermore, resumption of office life should help to increase demand for commercial real estate as well."
According to Rahul Sharma, Co-Founder, Equity99, sectors such as real estate, specialty-chemicals and automobiles are guiding the next stage of rally.
"This sector (specialty-chemicals) has sawn some correction in recent times due multi-fold rise in raw-material prices," Sharma said.
"However, considering the increasing demand and steady increase in end products price by companies we expect the raw material price increase to not have significant impact."
In addition, he pointed out that automobile sector has taken a huge hit by chip shortage crisis and is available at "good discount".
"However, we think that correction in this sector is over and is ready for next stage of up-move."
"Also there has been significant demand for EV vehicles and most companies are launching many EV models. We are bullish on this sector and expect a good move here."
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