BSE Realty index rallies 130% in FY24; analysts suggest focusing on these themes now

Analysts on Dalal Street are bullish on a couple of themes and sectors which may deliver solid returns to investors going ahead. In FY24, the benchmark BSE Sensex gained 25% till March 26, 2024. Sectorwise, the BSE Realty index gained the most 130% during the same period. It was followed by BSE Power index (up 83%), BSE Capital Goods (up 75%) and BSE Auto index (up 72%). Market watchers believe that robust inflows from foreign as well as domestic institutional investors supported market sentiments during the year.  

Going ahead, Achin Goel, Vice President, Bonanza Portfolio advised investors to zero in on themes such as healthcare, information technology, renewable energy, defence, manufacturing and infrastructure for the long term. In an interaction with Business Today Geol said rising population and growing life expectancy lead to increased demand for medical services, hospitals, and healthcare facilities.

“Government focus on expanding healthcare infrastructure and medical insurance penetration will be beneficial for the healthcare sector. Government schemes like Ayushman Bharat will increase healthcare availability to the masses, production linked incentive schemes and China + 1 theory will be a growth driver,” Goel said. The BSE Healthcare index rallied 59% in FY24 till date.

Sharing his views on the IT sector, Goel said that segments like cybersecurity, artificial intelligence and emerging technologies hold growth potential. “We are bullish on midcap IT companies given their aggressive pricing policy and lower deal size enabling them to capture good market share,” he said adding the ongoing shift towards clean energy also presents opportunities for renewable companies involved in solar, wind, and other renewable technologies.

The analyst further added that the government's Production Linked Incentive (PLI) schemes in key sectors like electronics, IT hardware and drones are incentivising domestic manufacturing and attracting global players. This is evident from major phone brands establishing Indian production facilities, with Apple committing 25% of exports from India. Furthermore, the US carmakers like Ford and Tesla are exploring local production to tap into the Indian market’s potential.

He also believes that increased government spending on infrastructure projects like roads, railways and airports creates opportunities in related industries like construction and engineering. Sharing his thoughts on the defence sector, Goel said the the defence ministry mentioned that 98% of the total procurement worth Rs 2.23 lakh crore announced recently, will be sourced from the domestic industries and that move will give a substantial boost to the Indian defence industry in achieving the goal of 'Aatmanirbharta' (self-reliance) in defence industry.

On the other hand, Anirudh Garg, Partner and Fund Manager at INVAsset said, they identify significant value in large-cap stocks, which, are poised to deliver solid returns to investors. “This conviction is further bolstered by the ongoing global trend of premiumisation, notably in sectors such as travel, lifestyle, and housing. The post-Covid era has witnessed a notable rise in asset prices, which, in turn, has elevated per capita spending patterns—a trend we anticipate will persist. Furthermore, our outlook remains bullish on defence companies. We believe these entities stand to benefit significantly in the long term, especially as technological advancements and geopolitical dynamics evolve.”