InvestorQ : Should I be buying only new economy stocks like IT, pharma or should I buy old economy stocks also in the coming days?
Dilmini Mercia made post

Should I be buying only new economy stocks like IT, pharma or should I buy old economy stocks also in the coming days?

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Dawn Cherian answered.
1 week ago
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Actually you should. Pharma and IT are the obvious plays in this market. But you must not miss out on GDP recovery, so you must play the GDP recovery too. The 9% GDP cut would mean much faster growth in the coming years. That could mean demand boost at multiple levels.

Companies are likely to benefit from a surge in retail and industrial demand. As investment in construction and infrastructure pick up, support segments like steel, copper, electrical equipment and cement could benefit in a big way. Capital goods names could also gain from fresh investments planned to boost supply.

Another option would be to play the straight consumption plays. For example, capital goods could benefit due to demand for capital equipment from the power, telecom and oil sector Traditional favourites like NBFCs, banks and FMCG could be absolutely hot property.

There are two more themes to keep in mind for you. Firstly, the next year will be all about growth, so valuations will not matter so much. Therefore, a high growth company at 40X P/E would be better than a languid utility company at 8X P/E. Don’t go by valuations alone.

Markets are clearly rewarding companies that are conservative on debt. Don’t splurge but cut down on debt. Even those companies that are aggressively monetizing assets to reduce debt would be in the limelight. Low debt could be the one big theme next year.

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