5 sectors that will outperform in 2021 – Business2Business

Our top picks would be banks, industrial companies, capital goods, cement, and housing material, suppliers. All of these will be top outperformers for next year, says market expert Ajay Bajja.

What are you going to keep top of mind as we head into 2021?

It should be a barbell strategy. The momentum trade is not going away anytime soon, given the low-interest rate and digitalization that is happening. Thus, IT and pharma stay, but the recovery trade is also gaining momentum. Overall, in the last three months, particularly in the US market, Vanguard has achieved a value of 2x the S&P 500 and achieved 6x times the Vanguard momentum or growth ETF.

There is reversal or rotation into sectors. We have seen banks as the main beneficiaries and then they were dedicated to consumption. We will look at these topics in industrial and capital goods and those that seem very interesting and could perform better next year. So our business basket is diversified as always, but the best options will be banks, industrial companies, capital goods, cement, and suppliers of materials suppliers. All of these will be the outperformers for next year.

How are you looking at the entire pharma space?

I would say that the most preferred part of pharma would be the large-cap pharma, you have seen the top three players get quite a few approvals and new approvals coming in. I think that will help. Midcap is transitioning. We are seeing quite a few things happening in midsize pharmaceutical companies. As one of the big themes for next year, the momentum continues in pharma and it is in very good shape for India. Second, many multinationals have offered China nearly a 50% discount in terms of getting their drugs approved in the Chinese market. Things like that can create more opportunities for our players as select manufacturers and suppliers. The third big thing that happens is that there is an expectation that between 60% and 80% of the world's population will be vaccinated this year and that gives a huge stash of profit and loss for these pharmaceutical companies and our companies as suppliers that will get a part of that. There will be a line change even when it comes to multinational drugs operating in India. They will bring these vaccines at a cheaper cost and they will manufacture them in India and they will administer them in India. All of this will boost drugs. We see a lot of catwalks for drugs even in the next year and beyond.

Source: Economic Times

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