Thematic Investing is an approach to investing wherein you identify a theme and then invest in stocks that are likely to benefit from such a theme. They are different from sectoral investing. Sectoral investing only looks at a sector or industry whereas thematic investing looks at larger themes and can encompass a number of industries. Here are some cases…
If you expect interest rates to be reduced by the RBI, you can play on the cost of funds theme which will positively impact all rate sensitives. Hence as a thematic investor, you can buy stocks in the banking, auto and real estate sector since all these sectors are likely to benefit from a cut in interest rates.
If you expect the government budget to give a boost to rural spending, then you can play the rural spending theme in the following ways. You can buy two-wheeler and FMCG stocks as they will benefit from increased in rural areas. You can also buy companies that make tractors and fertilizers since farmers are likely to have greater spending power to invest money in these areas.
In fact, the NSE has some thematic indices which also you can track to understand how themes are doing. There are indices based on the theme of consumption; on the theme of commodities; on the theme of mid-caps etc.