Where to invest in 2021?
The year 2020 can be best explained in the words of RBI Ex-Governor, Raghuram Rajan, who says, “A crisis is a terrible thing to waste”.
The ongoing year started off smoothly with steady markets and almost no inhibitions of what might be coming at us. However, the COVID-19 virus, which originated in China, soon spread through the entire nook & corner of the world and shook the economy globally.
As a result, the entire world came to a standstill, affecting a lot of sectors such as retail, healthcare, tourism, aviation, and automobile. It led to a substantial drop in the GDP as well as raised the level of unemployment rate in the country.
Despite the downturns, the markets are currently soaring and have risen consistently since March's lows. We also witnessed a series of record-breaking intraday slides, where Sensex crashed a little over 4,000 points in March and also, observed enormous cash exits to the tune of Rs 13,960 crore, the largest cash outflow ever in such a short span.
The volatility index or the fear index, which was observed at an unprecedented 84 per cent levels, never-seen-before volatility, came down to 19 per cent at the end of the year i.e. in November. We had one of the best months (November) in history with several records been broken.
Besides, we also saw IT and the pharma sectors improving at the beginning of the year and the cyclical sectors like bank & cement saw massive growth in the second half of the year. Sectors like entertainment and tourism were the worst struck. Digital services, e-learning, remote working tools, and software saw a great demand and had an extraordinary customer base from all over the globe.
We hope to see less volatility in the year 2021 than what we saw in 2020. Those stocks that benefitted from the economic recovery are expected to do well.
The expected stimulus in the US & Eurozone as well as the government’s expansionary fiscal & monetary policy will help equities remain in the limelight in 2021. With interest rates at an all-time low and a rise in government spending, we can expect a rise in investments along with a growth in the financial sector.
Due to the excessive volatility in the markets, a few things that need to be looked at are the valuations and the stock prices of the companies, which have gone up too fast, too soon, thereby, indicating that there’s a possibility of correction by the market.
In this special issue of Dalal Street Investment Journal (DSIJ), we would provide a data-backed analysis along with the performance of all sectors, compiling more than 1,000 companies. We would also be offering portfolio recommendations for our readers, i.e. – ‘Top 10 picks for 2021’.
In this exciting & rare moment, get an edge over how to invest in 2021 by getting this issue!
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