Three long term investment themes to bet on

Pranati Deva
Updated: 13 Dec 2021, 05:09 PM IST
TL;DR.

Investment trends keep on changing and one must be up to date to properly use those as investment opportunities. Here are a few such trends which are likely to dominate the market in the coming years.

Key investment themes to bet on

Key investment themes to bet on

While betting on long-term wealth creation, it is pertinent for investors to keep looking for trends that are likely to be the focus in the next decade at least. While quality blue-chip stocks remain safe investments and popular among investors, some new generation themes are likely to flood the market in the coming years. Investing in such trends early on may become a great investment opportunity in the long run.

Let's take a look at some trends that are likely to dominate the coming decade.

Internet

From e-commerce to digital payments and digital content, the internet as a theme has already started to create a buzz. Over the coming few years the usage and demand of internet-related companies are only going to rise. Such companies are already attracting a lot of investment from big investors and a lot of them are moving towards listing.

In the coming years, the Indian equity market is likely to be flooded with IPOs from the digital sectors. While Zomato has already started the trend, a number of other internet firms like Flipkart, Nykaa, Naukri.com, Ola are already in the process of planning their IPOs.

The 9,375 crore Zomato IPO also received a stellar response from investors, rising over 80 percent on its listing day and crossing the market capitalization of 1 lakh crore on the same day. Such a response from investors shows how the internet as a theme has already received a thumbs up from investors. Companies from all avenues like edtech, fintech, gaming, foodtech, e-commerce will soon become a major part of the equity markets as well as an exceptional investment opportunity.

According to the IAMAI-Kantar ICUBE 2020 report, India is expected to have over 90 crore internet users by 2025, increasing India's internet penetration by 45 percent in this time period. The internet economy is forecasted to surge nearly 9 times in the next decade and is likely to contribute 9 percent to the GDP by 2030.

The pandemic has given a stronger push to the Indian internet sector and this is only going to increase in the coming future. Such internet IPOs will be an attractive opportunity for investors however, one must not eliminate the risk. Such investment will also carry high risk and will also be impacted by market volatility.

Healthcare

Another important investment theme to look out for is healthcare. When the pandemic hit, healthcare was one of the very few sectors that did not take a massive dive. It is also one of those sectors that are always in demand despite the state of the economy or markets.

Innovation across the sectors like new technology, better drugs, vaccines will lead to new investment opportunities in the future. The sector is always evolving and there are companies that are working on groundbreaking technology and medicine like cancer treatments or easy and cheaper diagnostics etc and such companies will provide stellar opportunities for investors if invested at the right time.

In a recent report, even NITI Aayog outlined the range of investment opportunities in the sector.

"India’s healthcare industry has been growing at a Compound Annual Growth Rate of around 22 percent since 2016. At this rate, it is expected to reach $372 billion in 2022. Healthcare has become one of the largest sectors of the Indian economy, in terms of both revenue and employment. Several factors are driving the growth of the Indian healthcare sector, including an aging population, a growing middle class, the rising proportion of lifestyle diseases, an increased emphasis on public-private partnerships as well as accelerated adoption of digital technologies. The Covid-19 pandemic has not only presented challenges but also several opportunities for India to grow. All these factors, together make India’s healthcare industry ripe for investment," the report stated.

However, one must note that there are also risks like USFDA approval, unsuccessful results, etc. But with proper research and knowledge of daily trends, an investor can find some amazing hidden gems in the sector which would prove valuable for long-term wealth creation.

Electric Vehicles

With more companies focussing on decreasing the carbon footprint on the earth and going green, electric vehicles will soon be more and more in focus. Even though India is still years away from having EVs properly on the road, the recent push from the government with plans of charging stations, etc, EV is also a great investment theme, especially for investors who want to get in on the trend early.

The government of India is targeting 30 percent of overall vehicles to be electric by 2030. As part of the Paris climate agreement in 2015, India is committed to reducing greenhouse gas emissions intensity by 33-35 percent by 2030 versus levels in 2005. Electric vehicles seem to be the way to go since they mitigate the adverse impacts of automobiles like air pollution as well as dependency on oil. In a report, the government noted that the electric vehicle market in India is likely to be valued at $2 billion by 2023.

A number of firms abroad like Tesla have already started production of electric vehicles and over 18 million EVs are likely to hit the road in the next decade.

EVs are another theme investors must keep in mind for the long term and invest in this trend early for better results. One can also start with investing in firms that build auto parts for EVs since they will also witness a rise in revenue once the production starts properly along with firms that have plans to build such vehicles in the future.

These are some of the long-term investment themes one can keep in mind and look for the right time to invest in for long-term wealth creation.

First Published: 13 Dec 2021, 05:09 PM IST
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