promising sectors in 2008


Last year has been quite good for the investors in the domestic stock
markets. Both Sensex and Nifty went up almost 50 percent from their
previous year levels. The domestic markets are in a long-term bull run
that started from 2003.

We have seen many phases of short-term rallies and consolidation in
this long bull run. These shorter rallies were always dominated by
some sector's stocks based on market conditions and investors
sentiments. We have seen huge variations in sectoral performance from
2006 to 2007. Market rallies in 2006 were mostly lead by IT, telecom,
banking, real estate and sugar sectors whereas in 2007 real estate,
infrastructure, banking, power and energy stocks outperformed the
index.

Positive investor sentiments among foreign as well as domestic
investors encouraged a healthy flow of funds into the markets.
Inflation, interest rates and rupee appreciation remained the main
concerns in 2007, but they did not impact the investor sentiments in
the market. Historically, it has been proven that investments in
equity give better results than any other investments over the long
term.

Here are some sectors that are looking good from a long-term
investment perspective. Investors can build their portfolios by
picking good stocks from some of these sectors:

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.