If you consider the sectors in the marketplace of Indian stock market, there is a huge list of the company. The firms are spread over a range of industries, and the sectors are a way to classify companies in the stock market. It is categorized depending on the various industry they operate with. Each stock market has a special focus on the Indian equity space, with the difference in their stock price in India.
The key sectors are aviation, agriculture, FMCG, financial service, automobiles, real estate, infrastructure, textile, tourism, and others. However, these are categories under major sectors in the economy.
It deals with extracting and harvesting natural resources like those involved in mining and agriculture.
This sector includes manufacturing, construction, and processing companies. It mainly relates to the production of the finished items starting from scratch products.
The financial companies, retailers, and entertainment sections are included in this sector, mainly to offer services to cater to customers.
It deals with the knowledge or intellectual department of research and development. The other departments include consulting, business, education, and different services.
Let us take a look at the major sectors of the Indian stock market.
The sector consists of manufacturers of commercial vehicles in different varieties. They are also part of the agricultural economy as the makers of tractors. Therefore, commercial vehicles can get followers from the Indian market. Bajaj Auto, Escorts, Ashok Leyland, and Maruti Suzuki are notable brands in the sector.
The financial sector is a prominent one that facilitates the easy flow of money. Other companies seek debt from the banks for their capital structure. This creates a difference in financial companies’ profits from non-financial companies. Try to have a sectoral approach to investing in the correct stock to get a suitable and timely return. Check the credit ratings of each financial company before investing in it.
Agriculture is another primary sector on which almost 58% of livelihood depends. Moreover, the sector constitutes almost 17.8% of the total gross value added in India. The agriculture stocks in India, and its growth rate shows how it is rightly considered one of the pillars of the Indian economy. As agriculture and other allied sectors are related to products of domestic consumption, it is increasing tremendously. This further contributes to change in the industry, impacting its growth for increased use of agro-based products across the global market. Economic growth and food production increase, so investing in this sector is worth the returns.
The agriculture sector has experienced massive growth, evident from its Agri exports counting to $50 million for the financial year 2021-2022. When investors consider this sector for investment, they should go by the company’s scale and capacity in the production market. Besides, check the return ratio of a company with a return on capital employed to understand the prevailing condition of the sector’s stocks.
The list of latest products from the pharma industry includes excipients, vaccines, and a cure for diseases. It helps to be familiar with investors and regulates the products for the good of the citizens. The industry’s pricing power puts the companies on the priority list.
The FMCG companies are the ones catering to consumer goods in frequent need. The products guarantee a steady income and increased demand resulting in a steady profit. Therefore, one can think of a strong return from investing in this sector.
Some prominent ones are Colgate Palmolive, Procter and Gamble, Britannia Industries, and Hindustan Unilever. This sector is resilient to recession. Even, when other sectors are experiencing a bad time, this grocery store would be busy with its steady flow of income and selling with the FMCG companies.
The real estate sector helps develop and manage real estate properties. The investment trusts mainly purchase income-generating assets like hotels and office buildings. The prominent names in real estate are Simon Property Group and American Tower Corporation.
The material sector includes business that is involved in the manufacturing of items like the following:
- Construction of paper, chemical, construction material, and glass
- Companies that are involved in the making of forest goods and paper
- Involved in mining and metal companies
In this sector, some prominent names are Sherwin-Williams company and DuPont, which have made a prominent place and are worth investing in.
The industrial sector will include the businesses that are involved with a range of other industries that go as further:
- Electrical equipment
- Aerospace and defence
- Construction of Industrial machinery and engineering
In this, the largest names are Honeywell, Union Pacific, and Boeing, which investors can consider for investment.
Which sector to go for investment as per the current scenario?
Given the current economic situation, the overall impact on the agricultural sector is low. As per the existing investors in fertilizers, this impact will be less other than on the clearance and the logistics group. It will be impacted slightly in the case of agrochemicals that mainly depend on the export and import of raw items.
Consider the potential returns for investment
When planning for investment, go by individual stocks in the concerned sector. The available options are pretty narrow, mainly due to the recovery stage of the Indian economy. Check the sector’s statistics thoroughly before you wish to invest in it and the potency of return in the years to come.
No matter which sector you invest in, check how it brings in benefits for the economy. Depending on the picture of the past few years and the current scenario, it can give you a good idea of how to plan to invest in the sector. Take the major financial risks into consideration and whether the sector has sufficient cash to make up for them, even though it generates less profit than expected. These are some vital parameters that cannot be ignored and help one take the right decision when investing in the Indian stock market.