Future Growth Areas - Indian Stocks

Short term Outlook for India is bad as for as annual returns are concerned. Inflation is sky high , growth is slowing down , interest has started inching upwards giving pinch to consumers in every price band.

Currently inflation is 6-7% higher than last year and 2-3 times higher than cushion level of R.B.I.

Though the cyclic up-downs will continue to happen, promising themes will keep emerging which will provide huge growth and fuel Indian Economy.

Following themes can emerge as winners.

1. Aviation/Defence -
Indian Military yesterdat got its first Hawk (AJT) built by HAL . Technology transfers and localization promises a lot for Indian Manufacture. This will help us developing Defence Aviation industry. Component Manufactures will gain immensely. New bidding process require that the supplier honour a 50% offset clause, or source 50% of the components required to complete the order, by value, from domestic manufacturers.

Indian companies have to build capacity to absorb such huge offset work which would be coming to them.
Larsen and Toubro Ltd (L&T) which is India's largest Capital Goods and Infrastructure firm plans to bid for the order to the company winning the MMRCA(medium multi-role combat aircraft) contract of about 10 billion dollars.

The MMRCA deal involves buying 18 aircraft from the seller and manufacturing 108 under licence by 2012.

2. Energy and Power

India has a huge power deficit and demand for power is going to grow substantially. Many power projects are going to come up to scale up the supply. UMPP has been introduced through Electricity Act 2003.

Gas and Oil Finds in East Coast would provide much relief to energy hungry country benefiting fertilizer,power and other industries. It will also help reduce forex outflow.

3. Infrastructure

This theme is being played for last 2-3 years and will continue for some more years. If India has to grow it has to build huge infrastructure in every field - roads, ports, airports, power, oil/gas, housing, malls etc.


4. Nuclear Power
Power generation, equipment and capital goods manufacturers are very optimistic of Indo nuclear civilian deal.
They are hoping that components for the new nuclear deal will be manufacture locally and initially by serving foreign nuclear manufacturer, they will become supplier and become part of the supply chain eventually.