Best Sectors in the Indian Stock Market: What Are Their Future Prospects?
Best Sectors in the Indian Stock Market: An Overview
The Indian economy is expected to grow in the next decade and it is considered the best time to invest in India. When it comes to picking stocks to invest in, the first thing most investors think of is stocks that are trending which will give them multifold returns. However, picking trending stocks will not give benefits in the long run. So, investors need to change their game of investing by investing in the best sector stocks that are likely to grow in the near future.
Opt for picking stocks for growing sectors to make good profits in the long run. Few sectors such as FMCG, mining, and health care sectors are never going out of demand. In this article, we are going to learn about the best sectors to invest in India India
Best Performing Sectors in India
- Health and Insurance sector
- Renewable energy sector
- IT sector
- Real estate sector
- FMCG sector
- Investors should invest in the best sector to invest in 2022 to earn maximum benefits from the stock market
- Opt for picking sector-specific stocks that have good fundamentals.
- The Indian economy is likely to grow in the next decade. So, it is a good time to invest in the best sector.
Health and Insurance Sector
Health and insurance sector has seen tremendous growth in the past two years after covid outbreak because people realize the importance of good health and having insurance. According to Invest India, the health sector is likely to grow by 16-17% and is about to hit $372 billion by 2022. The major components of the health and insurance sector are hospitals, Diagnostics, Medical insurance, Medical equipment, Pharmaceuticals, and supplies. The percentage of insurance premiums increased to 4.2% in 2021 because of the growing demand for insurance. The CAGR (Compounded annual growth rate) of the healthcare industry of India is around 22% over the last 6 years.
FMCG FMCG sector is the most secure sector among all the sectors in India because their products will always be in demand as they are necessities. People may delay buying luxury products, going for a vacation, or investing in real estate/stocks but not essential products such as packaged foods, drugs, consumables, dry goods, beverages, and toiletries. So, if you are looking for a safe sector to invest in, investing in the FMCG sector for the long term will be the ideal option for you. Hence, FMCG companies have a lot of potentials to grow and are one of the most preferred sectors among investors to invest in India.
Top FMCG sector stocks to invest in are Hindustan Unilever, Nestle India, P&G, Dabur India, ITC, Adani Wilmar, Britannia Industries, and Marico. These names are popular in every household as these products have been used by people for over decades.
Information Technology (IT) Sector
From 1990 to 2010 was the era when the internet was booming at a high pace. IT companies grow much faster than other sector companies because of the growth of technological advancement. The Indian government initiated various beneficial schemes such as digital India to promote IT and economic needs.
According to NASSCOM, the revenue of the IT sector is growing at 15% per annum and is likely to hit around $350 billion by 2026-27. AI (Artificial Intelligence), analytics and cloud computing will contribute to the growth of the IT sector.
Some of the top IT companies are Infosys, Tech Mahindra Ltd, Tata Consultancy Services (TCS), Wipro, HCL Technologies Ltd, L&T Technology Services Ltd, Mindtree, Larsen & Toubro Infotech Ltd. household
Since India is a developing country, there is more scope for the infrastructure sector to grow in the coming years. The government said in the recent budget 2022-23 that it will spend heavily on infrastructure to build railways, roads, airports, highways, expressways, shipping, aviation, waterways, mass transport, ports, and logistics. Hence, it will contribute to the economic growth of the country. However, infrastructure growth is reliant on manpower.
So, you can invest in infrastructure sector stocks for the long term to reap maximum benefits as it is one of the fastest-growing industries. The government has also initiated various schemes such as Make in India, ambition for smart cities.
Some of the top companies in the infrastructure sector are L&T, Reliance Infrastructure Limited, IRB Infrastructure Developers Limited, GMR Infrastructure Limited, Hindustan Construction Company, GVK Infra, and Adani Ports.
Renewable Energy Sector
The global climate is diminishing day by day because of the high increase in carbon emissions. To achieve the Paris agreement's goal, the aim is to keep global warming below 2 degrees Celsius. And to achieve this goal, countries around the world have to reduce carbon emissions.
India ranks third when it comes to carbon emissions and this is the reason India is coming up with various schemes to promote green energy as they have high international pressure. The Government of India has initiated various schemes to promote electric vehicles by giving tax exemption on EVs loans. Hence, the renewable energy sector is an attractive sector to invest in.
The ministry of power has initiated REIPFB (Renewable Energy Investment Promotion and Felicitation Board) to provide help to investors as well as the industry for new investment and project development in the renewable energy sector in India.
Real Estate Sector
The Real Estate market is likely to reach Rs. 65,000 crores by the next two years and it will contribute 13% of the total GDP of the country. The real Estate market is coming up with affordable housing, making it an attractive sector to invest in. Moreover, the interest rates on home loans are low. Some of the important Real Estate markets are Bangalore, Pune, Hyderabad, Mumbai, and Ahmedabad.
The automobile sector offers a wide range of vehicles such as cars, bikes, tractors, jeeps, SUVs, scooters, etc. The CAGR (Compounded annual growth rate) of the auto industry is likely to grow by 7% in the next few years. In the Automobile sector, the EV segment is the most likely to grow in the coming years because of the Paris agreement.
One thing you need to keep in mind is that the automobile sector is cyclical in nature and the sales are affected by any changes in economic conditions. So, make sure to diversify your portfolio across different sectors.
The fintech sector is growing rapidly over the last two years and is likely to grow in the coming years. Hence, it is one of the fastest-growing sectors in India. The main objective of a fintech firm is to improve customer lives by consistently improving the product. Fintech is consistently evolving in various areas such as Hybrid cloud solutions, Decentralized finance, Invisible ID, Increased merging of cybersecurity, Exponential computing power, sustainability efforts, and customer experience hyper performance. Hence, you can invest in the fintech sector for the long term to get the maximum benefits.
Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns
Now that you are aware of which industry will grow in the future, you can opt to invest in them. If you are a long-term investor, you should check for the best sectors while picking stocks for the long term.
Picking sector-specific stocks will help you earn lucrative returns in the long term. Make sure that the sector should have a high potential to grow in the next 10 to 15 years. However, investing in the share market is risky. So it is advised to do proper research about the company such as its balance sheet, cash flow statement, P&L account, fundamental ratios, and cyclical nature of the sector, and check their annual report to make informed decisions. Also analyze your investment objective, ability to take risks, and timeline of your investment before taking any investment decision.
This is not an investment advisory. The blog is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. The performance and returns of any investment portfolio can neither be predicted nor guaranteed.
Which sectors will grow in the future?
According to experts, it is expected that the banking sector, Healthcare, and insurance sector, IT sector, Automobile sector, Real estate sector, Renewable energy sector, and FMCG sector will grow in the future.
Which sector is best for investment?
The energy sector, Real estate sector, financial sector, and infrastructure sector are some of the sectors that are considered best for investment.
Which sector has given the highest return?
The IT sector has given the highest return as the NIFTY IT has given 90.99% in the last 3 years. Moreover, it has contributed 9% to the GDP of the country.
What is the best sector to invest in in 2025?
The best sectors to invest in 2025 are the Energy sector, Financial sector, FMCG sector, Healthcare industry, Real Estate, and 3D printing.