How to approach sector-specific stocks & sector-specific funds? Aditya Agarwal explains

economictimes.indiatimes.com:

Aditya Agarwal, Co-Founder, Wealthy.in, says it is all about whether “I am picking stocks on my own versus trusting a professional fund manager to pick stocks for me. Let us say as an investor, I believe pharma is poised for growth. I fundamentally believe that in the next 10 years, we could have really large pharma companies in India. So, I am bullish on pharma as a sector, but I may not be so confident as to what companies are the best companies in pharma, which companies because every company goes through a different dynamics and so I might sort of trust a fund manager through a mutual fund route rather than trying to sort of go down it on my own.”

There is a lot of buzz going on around sector specific action in the market. We are looking at quarterly numbers now. What specific sectors do you expect to outperform in maybe a few quarters’ time?
Sector investing is very interesting and sometimes very exciting because all sectors go through cycles and if you catch a sector in its right cycle, then you can make outsized returns but that is also the downside of it because if you catch a sector in the wrong cycle, then you end up not being able to generate as much as Sensex or indexes returning.

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One can look at sectors in two ways: One way is to look at sectors that are poised for long-term growth; for example, financial service is one sector in India. We still have a long way to go in financial services and this sector will see continued growth in the long term. Lately