Looking for investment themes? Kotak Mutual Fund gives a few clues

Are you looking for investment themes that can help you create wealth in the long run? An analysis by Kotak Mutual Fund showed that at least six themes may throw big gainers in the next 10 years. Firstly, it believes that survival of the fittest is the law of nature and it is equally applicable in the corporate world.
 
The money manager thinks that the big is becoming bigger and strong is becoming stronger at present when the country is witnessing consolidation across industries. For instance, a decade ago, there were dozen-plus telecom operators, however, now there are four.
 
“We see consolidation across industries such as banks, steel, cement, NBFC and aviation, resulting into big companies becoming bigger and strong companies becoming stronger,” Kotak Mutual Fund said.
 
It further sees the second trend in the revival of the investment cycle. Over the last few years, private investment was on the back foot. Now, with all-time high levels of cash and visibility on economic revival, many companies are looking to invest. In the cement, steel and sugar industry, capex cycle has started. “Capital goods companies will do well in the years to come as their operating leverage comes into play with higher volumes,” Kotak Mutual Fund said.
 
Exports is the next theme on the list. Kotak highlighted that global supply chain managers are pursuing China plus one policy to diversify their sourcing base. With the PLI scheme, India is attracting serious players to become part of global supply chain management.
 
“Multi decade growth, which we saw in the IT and generic pharma sectors, is likely to repeat across many sectors supported by PLI schemes like electricals, electronics, textiles, bulk drugs, mobile handsets, chemicals, automobiles and auto components,” it said.
 
Real estate and home improvement is next on the list. Kotak Mutual Fund believes that stars are aligned for the realty sector. Housing has become more affordable thanks to stagnation in house prices over the last few years. Interest rates on housing loans are very attractive. “With RERA, consumer and developer interests are aligned. Real estate and home improvement sector will benefit from both primary and secondary market demand,” Kotak Mutual Fund said.
 
The fifth trend is digitisation, according to Kotak Mutual Fund. At present, most companies are working to strengthen their digital ecosystem. “We need to identify companies which are doing better than peers in adopting this digital ecosystem. Companies which expand the market, improve productivity or reduce cost through digitisation will be winners,” it said.
 
Lastly, Kotak Mutual Fund believes that financialisation is also the most important theme for the next decade. Indians are moving from real estate and gold to financial assets.
 
“Companies engaged in providing financial solutions from sectors like banks, fintech, insurance, mutual funds and NBFC will create huge value in the coming years. Digitisation of the financialisation sector will disrupt the existing order,” Kotak Mutual Fund said.

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