Stock Market Investment: Sectors to look forward to for better returns in the current scenario

Updated: July 17, 2020 12:16 PM

As the overall economy remains subdued under the current slowdown, certain sectors indicate that they may be ready for the picking.

investing in stock, where to invest in stocks, MF investment, MF investment in equity markets, SIP, stock markets, sebi, COVID-19 outbreak, bajaj capital, market newsThe patterns are changing nowadays – the growth opportunity in those areas for these companies is very good.

In the long term, if you want to make good profits with your investments in the stocks, then ensure that you are investing in growing sectors. Prior to taking any investment decision, study the markets, align your decision with your financial goals, and take objective related decisions.

As the overall economy remains subdued under the current slowdown, certain sectors indicate that they may be ready for the picking. Considering the current market situation, below listed sectors can be looked upon to invest for better returns.

Information Technology (IT)

The Information Technology Sector is at the forefront of innovation and at the center of the Information age, which has shaped the economy over the last 20 years and continues to do so in the foreseeable future. Various factors are boosting the growth of the IT industry such as economic necessities, technological advancement, and government initiatives like Digital India, etc. Considering these factors, the IT industry can be expected to keep on growing. Therefore IT stocks can be treated as one of the best sectors for long-term investment in India.

FMCG (Fast-moving consumer goods)

For more than 100 years, people are consuming a vast quantity of items from this industry and will continue to do so in the future as well. Few FMCG companies like HUL, ITC, Nestle, Emami, Dabur, and so forth are common names in Indian-houses. Most of the people living in Indian urban areas/towns have been utilizing their items for an exceptionally prolonged stretch of time.

During a recession or economic crisis, people may not invest in real estate/infrastructure, abstain from purchasing another car, and may not take new loans, but since FMCG items are the essential necessities-the interest of the FMCG items won’t decline as compared to other industries.

For the past few years, these companies have started to grow in Indian rural areas/villages as well. Earlier, people in rural areas did not like to use the products of FMCG companies. Nonetheless, the patterns are changing nowadays. The growth opportunity in those areas for these companies is very good. Hence, the FMCG industry is perhaps the best segment for long-term investment in India.

Automobile Companies

The Automobile sector has been on a slide for the last two years or more. After a slowdown in 2018, passenger car sales in 2019 were depressed across the board for all major players. While FY2019 was flat in terms of production, FY2020 has seen a steep fall of 15%. Similarly, FY2020 has been a challenging period for two-wheelers.

Lower pace of infrastructure, traffic congestion, and now the Covid-19 crisis has put the brakes on the automobile sector. But now due to Covid-19, people are preferably commuting through their personal vehicles rather than using public transport. Covid-19 is not going to exit soon, so it could increase the sales of the Automobile industry.

It is safe to say that by 2030 the world including India will run on electric vehicles. So, if you are futuristic and want to invest in the long term in the best sectors- you might not want to miss this revolution.

Pharmaceuticals Stocks

Although for the last few years, this sector was in the bear phase. However, for a long-term investment in India, the pharmaceutical is one of the best sectors to invest. Pharmaceutical companies are investing heavily in their research and development activities with advanced technologies.

Numerous Pharmaceutical companies are consistently developing better & cheaper medications and are additionally getting support from the government too. Due to the COVID-19, the focus is on developing the vaccination which primarily brings the sector under the spotlight.

While many industries are doing poorly due to negative economic conditions, the health industry can still perform relatively well because of the demand for medical facilities, drugs won’t decline, regardless of economic conditions. This is the reason why the healthcare sector is considered to be a “defensive sector”.

By, Jashan Arora, Director Master Capital Services

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