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Business News/ Markets / Stock Markets/  From healthcare to defence, top 5 long-term investment opportunities in emerging industries

From healthcare to defence, top 5 long-term investment opportunities in emerging industries

Amid market volatility, strategic long-term planning offers a reliable compass for investors to navigate uncertainties and capitalize on burgeoning industries.

Safeguard your portfolio from uncertainties and capitalize on emerging industries for sustainable growth.Premium
Safeguard your portfolio from uncertainties and capitalize on emerging industries for sustainable growth.

In the rapidly changing field of investment, volatility in the market has become a daily occurrence. Navigating the markets might feel like sailing through stormy waters with interest rates increasing, global conflicts heating up, and elections coming up soon.

However, there is nothing much to worry about for prudent investors who make a long-term plan for investment opportunities. Embark with us on a journey to future-proof your portfolio against uncertainties, and do not fail to gain from the growing industries.

Understanding market volatility: Causes and implications

Rising interest rates: The initiatives of central banks to tackle inflation have resulted in recent interest rate hikes, which have startled international financial markets. In an attempt to reduce inflationary pressures, these hikes in interest rates have resulted in increased borrowing costs and weakened investor confidence.

Because of increased volatility in different asset classes, sustainable economic growth has become a questionable topic.

Geopolitical tensions: Geopolitical tensions are another big concern when it comes to global financial markets. Whether it's a Russia-Ukraine conflict or Middle East instability, the trade disputes, and territorial conflicts have led to disruption in global supply chain management and unstable financial markets.

India is one of the largest oil importers and therefore is greatly influenced by the hike in oil prices because of tensions in the middle east and disruptions to oil supply routes.

As a result, investors are worried about their portfolios due to market volatility, currency fluctuations, sector-specific fluctuations, and much more. The major global occurrences cause a weakening of investor confidence.

Upcoming elections: Future elections in several significant jurisdictions, including the United States and India, have further increased the uncertainty in global financial markets. Elections frequently result in changes to regulations and policies that can affect several economic sectors.

As an instance, the recent election victory of the ruling BJP party in three of the four states in India has triggered markets into a state of excitement. This victory has benefited industries that align with the BJP's agenda, such as financial services and infrastructure mainly because investors expect stability and business-friendly reforms to continue.

The majority opinion is that the government's excellent record increases the possibility that it will win yet another term, which has improved the confidence of investors and the market mood.

However, market volatility may increase if there is a chance of political chaos as investors may need to modify their plans in light of upcoming new laws and regulations.

Future-proof your portfolio against market volatility

Seeing these market fluctuations, smart investors will try to make a portfolio that protects them from uncertainties causing losses. It becomes crucial to know and understand the risk ability and risk willingness to implement the risk management techniques for a safe portfolio.

For good returns and a future-proof portfolio, one needs to invest in a diversified asset class that appropriately maintains a balance between risk and return.

Identifying long-term investment opportunities

The short-term fluctuations of the market may cause worry to the investors but a long-term plan for diversified investment may help to withstand the turbulent market. The long-term investment opportunities in different growing industries provide a safer direction at times of market volatility.

Healthcare sector

As a result of rising healthcare costs, technology developments, and demographic changes, the healthcare industry has become a focus for investment. The COVID-19 pandemic helped the pharmaceutical industry flourish at first, but rising raw material costs have caused challenges in more recent years.

Despite this, pharmaceutical corporations are shifting their investments, particularly in oncology and dermatology, as governments also prioritise research and development and healthcare infrastructure.

Therefore, investors are focusing on pharmaceutical companies creating ground-breaking medications, biotech companies developing therapy using genes, and digital health startups improving healthcare delivery.

Growth Pattern of Healthcare Sector in India (USD Billion)
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Growth Pattern of Healthcare Sector in India (USD Billion)

Infrastructural sector

The new budget launched by the government allocates funds for infrastructural facilities such as transportation, telecommunication, water, and energy. The spending on infrastructure will be doubled to Rs. 143 lakh crore between the years 2024-2030.

Also, the goal of Make-in-India requires a strong infrastructural foundation that would lead to economic development and prosperity. India already constructed 74 airports in the first 67 years of independence and the figure doubled in the last decade. This reflects the country's infrastructure expansion with velocity.

Government support and investments made in infrastructure companies and areas like new bridges, roads, expressways, and railway infrastructure will result in an upgraded infrastructural framework and ultimately benefit the investors holding stocks of those companies. We also support this trend to increase investors’ profits and hold stocks in companies like J Kumar Infrastructure Limited, Titagarh Wagons, and Orient Cement.

Technological sector

Innovative technologies are transforming industries and promoting economic growth, therefore the technology industry remains a hub for investment. Particularly potential areas to invest in include cybersecurity, cloud computing, artificial intelligence, and 5G infrastructure.

With an objective of increasing future-focused wireless technology, the government of India aims to expand 5G networks across the country and make India a fully digital ecosystem. This would include a total investment of certain lakh crores during the year 2024 to 2027 in various building blocks of 5G.

Hence, tech firms have the opportunity to gain market share and generate substantial returns.

Manufacturing sector

The manufacturing sector has a contribution of almost 15-16 % to India’s gross domestic product (GDP).To strengthen the manufacturing sector, the government is taking initiatives for the development of technologies such as robotics, automation, and chemical-based manufacturing.

Corporates involved in automotive solutions, aerospace, electronic products, etc will observe a remarkable surge in revenues, and therefore, it's advantageous to invest in such companies.

Defence sector

Governments have raised defence spending in response to growing geopolitical tensions and changing security concerns, which have fueled the rise of the defence industry. Defence-related suppliers and technology companies can benefit from investments in advanced weapon systems, cybersecurity, and military modernization programs.

As the government supports national security, the defence sector can be one of the best choices for investors willing to invest with an objective of capital appreciation.

In conclusion, amidst market volatility and uncertainty, strategic identification and investment in key industries offer a pathway to securing high returns. By diversifying assets and exercising due diligence, investors can navigate the complexities of the market, positioning themselves for long-term success.

Divam Sharma, Founder and Fund Manager at Green Portfolio

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Published: 16 Feb 2024, 01:39 PM IST
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