Boom-time: Sectors to watch out for

Banking

Analysts are not ruling out a possibility of an increase in the non-performing assets of the public sector banks, going ahead.

Further, the Congress manifesto adds that it will strive to provide interest subsidy for agriculture, small and medium industries and education sectors. Thus, the government's dependence on the banking sector may be sustained in the future as well.

With the government borrowing programme at around Rs 3.6 lakh crore (Rs 3.6 trillion) in the first half of the year, bond yields are likely to stiffen and curtail treasury profits (mainly for PSU banks).

On the positive side, with the Left out of the picture, the government may open up the banking sector to foreign players and consolidate PSU banks.

For example, SBI has already merged one of its associate with itself and the government might consolidate other SBI associates with the parent.

Any moves to increase FDI limit in insurance from 26 per cent to 49 per cent will help financial institutions like ICICI Bank and HDFC to raise additional capital. Increased voting rights of foreign banks, which have more than 10 per cent stake in Indian banks, will bring the stocks of private banks into play.

Infrastructure

Most analysts believe that the market will give a thumbs up to infrastructure stocks as the Congress manifesto lists economic revival and restoring high growth as its immediate priority.

It also mentions that public expenditure on agriculture and infrastructure will be stepped up. The continuation of policies in the infrastructure space and expected increase in the liquidity should augur well for the sector.

Considering the Congress party's focus on the rural sector, investors need to look at companies in the rural infrastructure space such as IVRCL, Nagarjuna Construction and HCC.

Analysts believe that companies will now find it relatively easy to raise funds given the increasing confidence of the investors and flow of money from the FIIs and through the FDI route.

The decision-making process on projects related to infrastructure is likely to be expedited helping companies in this sector. Renewed buying is likely in infra stocks as valuations were beaten down due to growth concerns and credit crunch.

Real Estate

Improvement in the liquidity situation could be the biggest positive for this sector Analysts are expecting stability at the Centre and continuation of policies will attract more money from foreign investors.

Realty majors will now be able to raise funds through Qualified Institutional Placements or debt or through further equity issues. India's largest realty companies--DLF and Unitech--have already raised over a billion dollars in the recent past and chances are that others might follow.

Nirmal Jain, chairman, India Infoline, said "indications are that formation of a stable government will trigger flow of foreign capital in equity as well as debt. This would mean appreciation of the rupee and revival of liquidity-starved sectors such as real estate."

Analysts now believe that since the UPA can form the government without the support of the Left parties who were opposed to the idea of foreign direct investment, special economic zone projects, which were stalled, could get a fresh lease of life.