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
The Indian stock market has thousands of companies, and it’s easy to become paralysed by the prospect of deciding one to invest in. To make things easier for investors, the stock market is divided into many sectors that feature companies with comparable qualities.
Investors, motivated by the results of their investments in the past fiscal year, are prepared to devote a significant gear percentage of their savings to capital instruments in the forthcoming years. They are also motivated to invest in the growing industries in India.
The various stock market sectors have multiple advantages, including assisting investors in building well-diversified investment portfolios and understanding market behaviour.
What Are Sectors In Stock Market?
The stock market intrigues everyone, which may be a good thing. India, like every other country, has carved itself a place in the stock market.
The Indian stock market is segmented into many sections that function as the wide classification for the many publicly traded companies.
Sectors facilitate investor and portfolio management decision-making and efficiently distribute the corresponding portfolio’s funds.
Sectors in the stock market are simply a means to categorise Indian equities according to the industry type in which they operate. With over 1900 companies registered on stock exchanges, the market is like an unending curveball. This makes it difficult for an investor to separate them, particularly when a stock market segment is in decline.
As the stock market has grown in prominence, numerous stock market sectors have emerged. This can meet the demands of all investors and simplify the management of their holdings.
Top Sectors in Indian Stock Market
To better comprehend each sector, let’s go into more detail now for better understanding.
1). 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.
Top Bank & Financial Companies Stocks :-
| 1. | Power Grid Corp |
| 2. | Adani Power |
| 3. | NTPC |
| 4. | Adani Green Energy |
| 5. | Borosil Renewables |
| 6. | Reliance Power |
| 7. | Suzlon Energy |
2). Railway Sector Stock
The railways sector is crucial for transportation and logistics. Investors prefer these stocks for their steady demand and growth potential. Companies in this sector benefit from government support, infrastructure projects, and strong market demand. As urbanisation and industrialisation increase, the need for efficient rail transport grows. The railways sector offers stability and long-term growth potential. Our updated list of railway stocks provides essential investment insights for a reliable and growth-oriented portfolio.
Railways Industry in India is one of the largest ones in the world. For over 170+ years, the sector has been catering to millions of passengers every single day. From daily commutes to freight transfers, the widespread network of railways has been contributing significantly to the Indian economy’s growth.
Top Companies in Railway Sector Stock :-
| 1. | IRFC |
| 2. | RVNL |
| 3. | Texmaco Rail & Eng. |
| 4. | Jupiter Wagons |
| 5. | Titagarh Railsystems |
3). Defence Sector
This sector covers areas such as aerospace, land systems, naval systems, etc. Moreover, the defence stocks of India have expanded largely due to government support for developing and producing defence equipment.
Defence plays a vital role in protecting a country from internal and external threats, making it an essential institution. As a developing economy, India recognises the importance of upgrading its defence capabilities to become self-sufficient and modern, particularly in countering threats from neighbouring countries. The defence sector of India has witnessed a remarkable surge in stock prices as investors show strong confidence in its potential.
Top Companies in Defence Sector :-
| 1. | Bharat Dynamics |
| 2. | Hindustan Aeronautics |
| 3. | Paras Defence & Space |
| 4. | Zen Technologies Ltd. |
| 5. | Apollo Micro Systems Ltd |
4). Healthcare & Insurance Sector
Health care is an integral component of every economy, making it an important stock market sector. The stock market’s healthcare sector includes medications, hospital management, pharmaceutical businesses, medical equipment makers, and so on. Several implant manufacturing businesses are also part of the stock market’s healthcare 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.
Ayushman Bharat, a program that intends to offer health insurance to more than 100 million people, is one of several efforts the Indian government has made to improve the healthcare industry. Also, the government has raised the healthcare budget, creating investment opportunities and better healthcare services.
In India, the healthcare industry embraces cutting-edge technology like telemedicine, electronic medical records, and digital health platforms, giving the industry’s businesses new development potential.
Top Companies in Health & Insurance Sector :-
| 1. | Sun Pharmaceutical Industries |
| 2. | Dr Reddys Laboratories Ltd |
| 3. | Divis Laboratories Ltd |
| 4. | Cipla Ltd |
| 5. | Apollo Hospitals Enterprise Ltd |
5). 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
The stock market’s technology sector includes all technological industries, companies, software producers, and information technology companies. Information technologies include computer components, microprocessors, and operating systems. Companies such as Microsoft are affiliated with the stock market’s technology sector.
The Digital India program, which seeks to offer broadband connection to all residents and encourage the use of digital technology in the nation, is one of the efforts the Indian government has made to assist the expansion of the IT sector.
Top IT Companies Stocks :-
| 1. | Infosys Ltd |
| 2. | Zensar Technologies |
| 3. | Accelya Solutions |
| 4. | Wipro Ltd |
| 5. | HCL Technologies Ltd |
| 6. | L&T Technology Services Ltd |
| 7. | Mindtree Ltd |
6). Fast-Moving Consumer-Goods Sector (FMCG)
Fast-Moving Consumer Goods (FMCG) have seen significant growth in India over the past several years due to reasons including rising earnings, shifting lifestyles, and increased urbanization. The industry offers goods, including packaged food and drinks, toiletries, and cleaning supplies.
The growing demand for healthy and organic products is one of the significant trends in the Indian FMCG industry. As consumers’ awareness of their health increases, they look for natural, organic, and chemical-free products. By introducing new goods and spending money on research & development in this field, several FMCG firms in India are responding to this trend.
The FMCG industry in India is anticipated to develop quickly over the next several years due to increased consumer demand, rising incomes, and supportive governmental regulations. Nonetheless, the industry may encounter difficulties, including escalating rivalry, growing raw material costs, and shifting customer tastes.
Top FMCG Companies Stocks :-
| 1. | Hindustan Unilever Ltd |
| 2. | Nestle India Ltd |
| 3. | P&G and Health Care Ltd |
| 4. | Dabur India Ltd |
| 5. | ITC Ltd |
| 6. | Godrej Consumer Products |
| 7. | Britannia Industries Ltd |
| 8. | Marico Ltd |
7). Automobile Sector
This sector involves more than simply car makers. It also contains commercial vehicles, 2-wheeler, 3-wheeler, and tractor manufacturers. Because India is an agricultural economy, manufacturers of tractors and commercial vehicles have a strong following within the Indian investing community. The Indian market does not have a pure-play electric vehicle manufacturer like Tesla. Any change, though, is never far away.
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.
Top Automobile companies :-
| 1. | Exide Industries |
| 2. | Hero Motocorp |
| 3. | Maruti Suzuki India Ltd |
| 4. | Ashok Leyland |
| 5. | Mahindra & Mahindra |
| 6. | Tata Motors |
| 7. | Bajaj Auto |
8). Real Estate Sector
Real estate is one of the several stock market industries. The real estate industry is divided into two categories. Various stocks are accessible to play an important part in the establishment of new houses and residences. Additionally, these are made available for rent, which brings in money. The main source of income in the real estate industry is the rent from these homes, offices, and other locations.
In addition, it is anticipated that the Indian real estate market would gain from the country’s expanding urban population and rising commercial real estate demand. Furthermore, India’s office space market is anticipated to proliferate due to increasing demand from the business process outsourcing (BPO) and information technology (IT) industries.
As the government’s attempts to support affordable housing and enhance the regulatory environment take effect, India’s residential real estate market is also anticipated to revive in the coming years. The Goods and Services Tax (GST) rates on affordable housing are among the government’s initiatives to strengthen the real estate market.
Top Real State Companies Stocks :-
| 1. | Oberoi Realty |
| 2. | Indiabulls Real Estate |
| 3. | Prestige Group |
| 4. | Godrej Properties Limited |
9). Banks & Financial Services Sector
This is due to the fact that practically every other firm seeks bank financing to manage its capital structure. This is why earnings from financial corporations are separated from profits from non-financial companies. As a result, a sectoral approach to investing allows for this diversity to be accounted for. Non-banking financial companies (NBFCs), asset management companies (AMCs), rating and research institutions, insurance companies, and public and private banks are all part of this huge industry.
NBFCs bank with the unbanked. Mutual Funds are managed by AMCs. Rating agencies focus on credit ratings while also earning money from research materials. Insurance companies aggregate modest sums from a large number of people to cover the loss of a select few.
Top Bank & Financial Companies Stocks :-
| 1. | Federal Bank |
| 2. | HDFC Bank |
| 3. | SBI |
| 4. | Axis Bank |
| 5. | Kotak Mahindra Bank |
| 6. | ICICI Bank |
| 7. | Bank Of Baroda |
| 8. | Yes Bank |
Conclusion
The stock market has expanded significantly, which has led to the emergence of several sectors. The stock market sectors are essential because they simplify portfolio management for investors and investors. The sectors aid in putting the appropriate money in the appropriate portfolio. Additionally, it’s frequently suggested that investors diversify their portfolios to increase performance. Market segments, which include all businesses and industries, exist in India. Financial, healthcare, real estate, energy, consumer staples, and communications are just a few of the industries.
It makes sense for an intelligent investor to invest in India’s growing sectors for long-term investments. However, there is an important lesson to be learned here: not every growing industry will provide incredible returns. Therefore, diversifying is the best approach to selecting the best sectors in India for investment.
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.