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7 Stocks to Profit From an Irreversible Trend

Jul 18, 2019

Tanushree Banerjee, Editor, The 5 Minute Wrapup

Like most Mumbaikars, I prefer to take the "local" (suburban train) to work and avoid the nightmarish traffic jams.

The other day, on my way to home, I was once again witness to a recent but growing trend on the "locals".

Some well turned out people would board the train...and then start approaching commuters posing very specific questions.

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My curiosity levels had reached a tipping point.

So I approached one of them...

Turned out they were doing KYC (Know Your Customer) for Paytm customers.

Talk about online going offline!

Still not fully at grips with what was happening...and why, I pulled out my mobile and put Google to work.

And here's what I found...

Paytm now has over 350 million registered users. Transaction volumes touched 5.5 billion in FY19. Paytm expects this to double by FY20.

Unified Payments Interface (UPI), an inter-bank transfer app now does more than 750 million transactions a month. This number was 0.2 million before demonetisation.

What to make of these numbers though?

And how does it help you, dear reader?

For one, small players are using this app. From a roadside vendor to a kirana store, you'll find the app everywhere. These people who were out of the tax net for years are now a part of the formal economy.

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Once they are, they will have access to loans. These are people who used to borrow at 48-60% annual interest. Imagine when banks lend them at 15-20% interest rate.

Small businessmen, who otherwise would spend whatever they earn on paying off the huge interest, might think of expanding with access to low cost credit. As they grow in size, the lending will get cheaper and cheaper.

A huge untapped market would suddenly open up for banks and lending institutions.

A megatrend that we clearly see playing out over the next decade. And this is just one of many.

I've identified more than 50 such trends. Trends that we come across in our daily life but tend to ignore.

Of course, not every kind of business that seems to be following such trends would be huge wealth creators. And when I say that I am particularly referring to payment, e-commerce and consumer loan companies without sufficient risk measures in place.

When you do your next KYC, look at the trends. Think of the opportunity in the offing.

Trends that will take India to the US$ 5 trillion mark. Trends that will be a part of the transformation I call the Rebirth of India.

But be very careful about the kind of stocks you buy into to ride these trends. Only the best ones will ensure that you do not miss out on the wealth creation journey to Sensex 100,000.

I have shortlisted 7 stocks that I believe will benefit the most when these trends playout.

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These are stocks that also rank high on my safety-first approach. Bluechips with a high margin of safety. I call them safe stocks.

Stocks that are already a part of your day to day life without you even realizing it.

Chart of the Day

A key takeaway from India's budget was the government intent to borrow from overseas markets.

While it seems like a risky move, a look at India's domestic credit data may be the reason why.

Increasing Domestic Credit to Private Sector Key for Economic Growth

Domestic credit to the private sector in India is amongst the lowest in the world.

A huge chunk of the domestic borrowing is by the government. That leaves very little scope to lend to the private sector.

Low credit to the private sector means low capital available for expansion. A major hurdle for one of the major growth engines of the economy.

With the government set to borrow overseas, a lot of capital is expected to free up at home.

This also coincides with the recent efforts by the Insolvency and Bankruptcy Code (IBC) to resolve bad loans. This will free up further capital for lending.

A proactive step in this regard will be a huge boost to the economy going forward.

Warm regards,

Tanushree Banerjee
Tanushree Banerjee
Editor and Research Analyst, The 5 Minute WrapUp

PS: Dear reader, Tanushree believes this is the right time to buy the best 7 stocks in the market before they run up. Read more about these 7 stocks here...

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