What are the major investment themes for calendar year 2020?

As another calendar year comes to an end and a new year is about to commence, it is time to look forward at the big choices available for investors. Here are five themes that could play a major role in 2020 in wealth creation.

Watch out for PSU banks

PSU banks could be an interesting story in the year 2020. Most PSU banks have already provided for most of their bad loans and hence the peripheral risk is quite limited. Secondly, the NCLT cases are likely to enhance the liquidity flows into PSU banks and enhance their ability to expand their lending books. The last year has seen capitalization of most of the PSU banks and should help too. Above all, RBI is forcing PSU banks to monetize their exiting holdings in other companies and that is likely to help them spruce up their balance sheets. It is better to stick to the stronger names.

Strong consumption plays

Despite the weakness in consumption this year, the consumption stocks are likely to be the focus in the coming year too. The focus will be more on the FMCG segment that hardly saw too much of volume growth during the year. Auto stocks may take some more time to recover as the impact of weak rural demand and the shift to BS-VI will be an overhang on the sector. Urban demand will continue to drive this sector with rural demand at best; flat.

Base metals could see interest 

While metal stocks would still remain constrained by the weak industrial demand, base metal stocks could attract buying interest across the board. With China giving a boost to spending and Japan pushing another $240 billion into the economy, the sectors like copper, aluminum and zinc could attract a lot of buying interest in the coming months. It may not be a secular cycle but a boost is surelyon the cards for this sector.

Telecom could be a dark horse

Now many would really put their money on telecom but a lot is changing. Prices and ARPUs have bottomed out and there appears to be a trend towards higher prices; at least at the lower end of the telecom market. At the same time, the AGR issue is history and SUC has been put off for a couple of years. This could really be the dark horse.

 Privatization picks

This is not exactly a sector but the coming year could see the government ceding majority control in a number of PSU companies, which are not operating in critical sectors. Such companies will benefit in terms of sentiments as well as in terms of privatization of management and approach to business. BPCL and SCI may just be the beginning. You can look forward to many more such names in the coming year 2020!