My friend in California sounded a trifle sheepish. “Are you saying you’re now a multimillionaire,” I asked, a tad incredulously. He replied: “I must admit I am.” My friend, who’s retired and has spent most of 2020 in quarantine, has been investing smartly for years. A few years ago, he looked at Tesla’s financials and decided Elon Musk, for all his craziness, was a winner. And he’s been proved right, even as the pandemic raged and circumnavigated the globe.
In 2020, Tesla’s shares zoomed by 740 per cent. Tesla is now worth over $700 billion, almost as much as all the other global automakers put together. My friend also owns Apple shares and the iPhone maker’s market cap is now an astounding $2.29 trillion. I repeat: trillion.
I should emphasise that my friend isn’t the only man of sudden wealth. Low-interest rates have sent asset prices from real estate to stocks soaring around the globe. The Dow Jones Index is at record highs and so is the Sensex, which crashed when the pandemic arrived and has now smashed past all previous peaks.
The pandemic year 2020 threw up some predictable and other startling winners. Leading the way was the tech sector — from Amazon, Apple and Tesla to Indian software services companies and smaller health-sector start-ups — that has thrived as the world fell back on technology to make up for being forced into isolation.
Should we be optimistic about 2021? Yes, even though there are warning signs on the road ahead. The vaccine is here but the gargantuan task of doling it out is only beginning. And the more infectious Covid variant B.1.1.7, which has put the UK into lockdown, has raised fears it could push up cases in India though that’s not the central scenario of virologists here now. And stock-market pundits will always tell you prices rise when investors see a bright future ahead. The market took its winning streak to a 10th day on Tuesday, scaling a fresh peak of 48,486.24, so is it telling us 2021 will be a good year?
Look at Tesla once again. As it begins the new year, Musk has achieved what most analysts reckoned was an impossible goal. He’d promised to beat the lockdown and sell 500,000 cars. Nobody believed him but, in the event, Tesla fell just 400 short. At a peak, Musk’s fortune was worth $167 billion and don’t forget that was in a pandemic year.
Turn to our software-services giants like TCS, Infosys, HCL and Wipro. They’ve also been trading at record highs. Analysts reckon these heavyweights have made the digital transition to offering sophisticated services and have landed a string of deals in the process. Throw in the fact technology is suddenly in the fast lane and these companies are looking like good bets.
The software services companies deserve credit for moving with remarkable speed after the pandemic struck and enabling huge numbers of workers to function from home. Infosys Chief Operating Officer Pravin Rao went to the office only twice over six months and admits a year ago he wouldn’t have thought it possible to run the business that way. Infosys, for instance, has also been on a buying spree, acquiring companies like Kaleidoscope Innovation of the US, which is into medical, consumer and industrial product design.
Earlier in 2020, Infosys also snapped up US-based Simplus which strengthens its position in cloud computing. Motilal Oswal Securities reckons the world going online at spectacular speed will boost fortunes of India’s top five software services companies, fuelling double-digit growth through to 2022.
Start-ups on a high
More unexpected has been the start-up sector boom. When the pandemic struck and was followed by a lockdown, analysts grimly forecast many hi-tech start-ups would run short of money and close. Indeed, many fledgling firms have faced tough times. One drone company found to its chagrin India’s a tough country for manufacturing start-ups. It couldn’t get parts on time. Later, it couldn’t transport its drones to parts of the country where it had landed contracts. Most seriously, state governments stalled on paying bills. The company’s founder grumbles bitterly India should stick to services and give up on manufacturing.
There are thought to be around 50 electric vehicle start-ups across the length and breadth of the country. Some take the easy road and import Chinese parts and assemble them here. Others, like Ather Energy, have taken the high road and are looking good for 2021. Ather’s just opened a new plant in Hosur, Tamil Nadu, and aims to boost production to 8,000 vehicles a month from just several hundred in the early days. It is selling in 16 cities currently and plans to be available in 27 cities by Q1 2021. Ather’s also looking at producing lithium-ion batteries at its new factory and it’s assembling a charging network in cities where it’s heading.
But Ather will soon face a major rival: Ola, which aims to produce two million electric two-wheelers at its plant coming up in Tamil Nadu. Established auto companies like Bajaj and TVS, too, are ploughing more cash into electric vehicles and Hero MotoCorp is increasing its Ather investment.
Social distancing is still the need of the hour and that’s expected to accelerate the EV companies’ fortunes.
The biggest start-up winners have, unsurprisingly, been in health-tech, fintech and edutech. Byju’s now one of the country’s top start-ups and it will soon face competition from Embibe which has been bought up by Mukesh Ambani who clearly believes the edutech sector is worth his attention. In the financial sector, even older folks have learnt how to pay with PhonePe or PayTM.
When the pandemic hit, start-up finance defied predictions and didn’t dry up. In 2019, new start-ups attracted around $14 billion. In 2020, that fell to around $12 billion (if we leave out money which came to Reliance Group companies). That was even though big-bucks Chinese investors have stayed away.
There were also less-expected winners around the globe. One such was the bicycle industry in many parts of the globe — but not in India. In many parts of Europe, bicycles and motorcycles couldn’t be had for love nor money. And one new category appears to be finally speeding up: electric cycles that travel at speeds of up to 50 kmph. Suddenly, they look like a good way to get around town.
We could still be facing a grim 2021. It would be foolish to underestimate the destructive powers of the Covid-19 pandemic. But if we can put it mostly behind us, 2021 could be the year when the future comes speeding towards us faster than we could ever have imagined.