For a long time, India’s information technology (IT) sector has been a key driver of the country’s economy and the segment got a further leg-up after the Covid-19 pandemic broke out in March 2020.
Upgrading or incorporating new technology is one of the fastest ways to stimulate growth and make business more competitive. Covid proved to be blessing in disguise for tech companies to expand their footprints more aggressively. With newer tech start up listing in our country, India has emerged as the third largest start up ecosystem in the world after the US and China and the pace of growth is not showing any signs of slowing down. Over the last year, India has added three unicorns every month taking the total count to 51, ahead of the UK (32) and Germany (18). IT spending in India is estimated to reach US$ 93 billion in 2021 (7.3% YoY growth) and further increase to US$ 98.5 billion in 2022 – Source: McKinsey report
The COVID-19 crisis has brought about years of change in the way companies in all sectors and regions do business. According to a new McKinsey Global Survey of executives, their companies have accelerated the digitization of their customer and supply-chain interactions and of their internal operations by three to four years. And the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years.
Under Digital India initiative, implementation of initiatives like Aadhaar, UPI and Digi locker is ensuring faceless, cashless and paperless transactions that has laid the foundations of a strong, robust and secure Digital India.
The pandemic has come as a boon for some businesses and has wreaked havoc for others. Stocks such as Facebook, Amazon, Apple, Netflix and Google, or more popularly known as FAANG stocks, did extremely well due to lockdown and work from home norm. Video conferencing tool Zoom became the go-to app for interacting with colleagues and families in this pandemic. Reflecting this trend, technology sector funds in India have delivered more than 90% return over the last one year, as on Sept 2021.
One such best placed Technology fund in this space are Digital funds, which predominantly invest in equity/equity related instruments of companies in the Information Technology (IT) sector in India- Software, ITs , hardware and new age listed start-ups. The sector fund is suitable for investors who have advanced knowledge of macro trends and prefer to take selective bets for higher returns compared to other Equity funds.
Views are personal: The author is Ritesh Kale, Director, Big Bull Capital Services Pvt Ltd from Nagpur
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