BackTop sectors to consider for long term investment
‘If we analyse the growth figures of various companies across sectors and industries some are standing out,’ Ram Kalyan Medury, Founder & CEO at Jama Wealth said.
PremiumThe Reserve Bank of India (RBI) recently cut its FY23 GDP growth rate forecast to 6.8% from 7% earlier. This happened a day after the World Bank raised its growth forecast to 6.9% for financial year 2022-23 from a revised 6.5% accounted in October.
RBI Governor Shaktikanta Das has said that the Indian economy remains resilient and the country is seen as a bright spot in a gloomy world.
Indian stocks have offered refuge from losses that have otherwise plagued global equity investors this year. Fundamentals and medium-to-long term prospects remain stable for the Indian equities. However, in the near term, they face possible headwinds from oil prices, inflation, rates hikes and fund flows.
Ram Kalyan Medury, Founder & CEO at Jama Wealth has suggested top sectors in India that can be considered for a long term investment.
"If we analyse the growth figures of various companies across sectors and industries some are standing out," the Jama Wealth CEO said.
Read on to know about sectors that are expected to flourish in the near future.
Agrochemicals and Fertilizers
Agriculture is a core sector and companies in this will do well but it is also a tough sector because of tight government regulations. As of this quarter, a good YoY and EBIT growth are seen in the companies.
Given the trend in falling raw material prices, the margins should slightly expand as well. The sector over the last 3 years has seen a steady double-digit 12% growth in annual revenues which is very impressive. EBIT growth has been higher at 19%. This has been aided by a good monsoon in recent years.
BFSI
The BFSI sector has delivered a 12% revenue cagr and 33% profit cagr over the last three years. This trend ought to continue over the next couple of years if earnings growth in India stays above the other global markets. Chemical is a sector which has seen significant Capex investments that ought to yield fruits.
IT
This is the largest sector contributing to the country’s earnings (example: oil and gas). Wage pressures seem to be easing and margins are stabilising. Attrition also seems to have stabilised. There is a lot of talk of the US recession and jobs in the US might be getting axed. However, this might result in some offshore work coming to India. Over the long term, the sector will continue to do well.
Other sectors
Sectors allied to construction such as paints, electricals, and pipes are likely to benefit given the infrastructure push in the country. Consumer and FMCG will continue to be defensive plays. The automobile sector has been a laggard and might surprise us.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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