India's sunrise sectors

Ok, this article did originate with a very selfish motive. This month, I have some spare cash to invest in the stock market. The fact that its just taken a beating also helps. So trying to figure out which sector/area I should invest in set me thinking. Now I am a long-term & completely risk-averse player who would like to invest and sit back for 5 years before I am reminded that I own some shares. This means that I need to incorporate future potential into the stocks I buy as well. Logically, stocks are about businesses who need funding from the market for their business plans. Business plans involve providing a service/product/piece of information required by consumers today and in the future. Therefore, a logical conclusion from this hypothesis is that if you correctly identify potentially large and profitable future needs, you identify the companies ramping up to meet those needs and therefore those are the ones to invest in.

So I asked around for what could be the right companies/sectors to invest in and I was duly informed that I should identify India's "sunrise" sectors - e.g. pharma, IT, tourism.

Now pharma and IT are the ones which are most likely to face the wrath of the rising rupee. Besides, pharma gestation periods are long and risky. And IT has competition sprouting all over the world. I have just been informed, that India's biggest threat in the IT sector is not China but a country called Estonia. Refer to http://www.msnbc.msn.com/id/20053078/ for more. But the real reason for my diffidence about these two sectors is that I find them too pricey for me at the moment...Having looked at my traditional "sunrise" sectors, I decided to start with the basics. Right, so what do the 1 billion Indian consumers really need? And what are the basics in the modern world - Food, Shelter, Clothing, Communications, Energy. This domestic market would certainly need food (and lots of it). That effectively means food companies would be a good bet any day. They would need shelter. That indicates the real estate sector. And we also know that where you have a shelter, you are bound to have a mortgage provider. So the banking sector is the third choice. Finally, clothing indicates retail for me. That is something worth looking at. And finally we come to communications. An absolute must for a service economy I would say. So need to examine it further. There are essentially two available routes to communications today. The telecom sector and the internet. And finally we come to power. Why are people not too excited about it? Because it involved last mile wire connectivity. Because people consume and do not pay their bills and because there is fixed line infrastructure, it leads to power theft. Also people cannot afford to pay the full rates. So its a no no at the moment.But how will the economy continue to grow without one of its five basic needs unfulfilled...Now fixed-line infrastructure is something we really cannot do much about until they invent wireless electricity. But how about attempting the sachet and pre-paid strategy to power? You buy a connection, they install a meter with an alphanumeric pad. They charge you in advance and give you a 16 digit alpha numeric code which you feed into the meter. Voila!! There is power. The moment your tab runs out, the connection is automatically disconnected until you renew. Technology could help ensure that it is impossible to renew connections without the 16 digit codes. If you have renewed regularly, you move to a monthly payment system. It can be done. Will need to give it some more thought, because it doesnt solve the problem of electricity as a birth right or theft.....