The Economic Times daily newspaper is available online now.

    ‘Make in India’ push to drive flows into thematic funds in 2023

    Synopsis

    The strong credit growth and a major clean-up of the balance sheet drove public sector stocks, while the government’s push to increase spending on infrastructure and domestic manufacturing propelled the railways and defence sector outlook.

    ‘Make in India’ push to drive flows into thematic funds in 2023Getty Images
    In the last two years, thematic funds have gained traction, prompting mutual funds to add newer products in this category.

    In 2021, the net inflows into such funds were a little over Rs 25,000 crore. While this number dipped to about Rs 21,000 crore as of November 2022, thematic funds remain popular among the investor community.

    Given the emerging growth themes in India, experts do see inflows to thematic funds continuing in 2023.

    About 40% of the total equity schemes launched in 2022 by the mutual fund industry were thematic or sectoral funds.

    Unlike sectoral funds, thematic funds are more broad-based and are as good as diversified equity funds, said Santosh Navlani, chief operating officer of ET Money.

    If one looks at the top-performing thematic funds in 2022, public sector thematic funds gave the best returns to investors.


    Stocks of public sector companies across many sectors had a stupendous year. Several stocks in the railways, defence, and banking turned multibaggers in 2022 driven by positive growth factors.

    The strong credit growth and a major clean-up of the balance sheet drove public sector stocks, while the government’s push to increase spending on infrastructure and domestic manufacturing propelled the railways and defence sector outlook.

    “If the Indian economy will be the fastest growing in the world, as many forecasts predict, banking must do well. The sector is a direct reflection of a country's economic growth,” Navlani said.


    Thematic or sectoral funds are riskier than regular diversified equity schemes given the higher exposure to equity.

    Therefore, Navlani believes that for investors, it's best to stick to a diversified equity fund instead of focusing on any themes.

    THEMES FOR 2023
    At a time when globally, the US and the UK are on the brink of a recession and geopolitical tensions persist, the growth outlook for India remains bright. Therefore, sectors that are domestically linked are expected to do well and remain among the top bets for 2023 for analysts.

    Expecting credit growth and capital investment to play out as two broader themes in 2023, Motilal Oswal Broking expects sectors like banks, financial services and insurance, capital goods, infrastructure, cement, housing, defence, and railways to be in focus.

    An uptick in the capex cycle saw order flows of most companies rising in double digits, despite the Russia-Ukraine war and higher commodity prices.

    Axis Bank, State Bank of India, Larsen & Toubro, ITC, Maruti Suzuki India, UltraTech Cement, Titan Co, PI Industries, Macrotech Developers, Indian Hotels, and Bharat Forge are among the bets for the brokerage.

    Jefferies India sees multi-year growth prospects for the automobile sector ahead and is also bullish on cement, chemicals, consumer finance, and real estate. Despite the higher home loan rates, analysts believe that the upcycle in the Indian residential property market is unlikely to be disrupted.

    “With the RBI rate hike cycle nearing an end, and fundamentals still strong, we believe real estate stocks should O-PF (outperform) in 2023,” Jefferies said.

    (With data inputs from Ritesh Presswala)
    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)




    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more


    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

    Stories you might be interested in