Sectors to look out for in 2008

Infrastructure and real estate

The economy is expected to grow at a healthy rate of over eight percent per annum. Domestic consumption and investments in infrastructure are the prime drivers of growth in the economy. Infrastructure and real estate sectors' activities go in high gear in a fast-growing economy. Infrastructure is one of the most talked-about sectors in India. There is a huge demand for infrastructure development in the hotel and hospitality industry, airports, housing, malls, special economic zones (SEZ) and rail/road infrastructure. Many new schemes are coming under the public-private partnership (PPP) scheme. Many real estate companies were listed in the stock markets in the last couple of years.

Power and energy

The economy is growing at around nine percent per annum. Since the demand for power and energy has a direct co-relation with the growth in the economy, India's per capita consumption of energy is growing quite fast. Companies are going in for capacity addition to fulfill the growing demand for energy. As a result, there is a lot of optimism in the power and energy sector stocks.

Banking

Banking services are not much in demand in India (especially in rural markets). Private and foreign banks increased competition in the banking sector by introducing new services. Indian banks are also looking at increasing their profitability by increasing their customer reach, technology usage and with innovative ways to better serve their customers. It is expected that a lot of value will be unlocked with consolidation among smaller banks (especially smaller PSU banks) and there is a good opportunity to make high returns in the next few years.

Retail

The retail sector is one of the hottest sectors in India. The share of organised retail sector is less than five percent of the total retail market in India. The share of the organised retail sector is growing rapidly year after year. Many big players have already jumped into the Indian retail sector and many others are showing active interest in this sector.

Telecom

India is one of the fastest-growing mobile markets in the world. The market of mobile companies is growing month after month. The telecom penetration in India is less than 25 percent which is quite less in comparison to near the 100 percent in developed economies. In the short term, telecom companies are showing sideway movement due to confusion in spectrum and license allotment by TRAI to telecom companies but there is a huge potential for growth for telecom companies in India. Investors should use the current situation to accumulate these stocks with a long-term perspective.