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5 Ultimate Sectors for Long-term

Investment in India
Kritesh Abhishek
9-11 minutes

5 Ultimate Sectors for Long-term Investment in India:

When you are investing in stocks for the long-term, the first critical
factor to check is the life-span of the products/services offered by
that company. The products should be in use for at least the next
10-15 years. The last thing you want is that people do not need that
product anymore and the company ran out of business.

Further, if you want to make good profits from stocks in long-term,

then make sure that you are investing in the growing sectors. Few
sectors in India like utility, mining etc were good in the past as they
were growing at a decent pace at that time. However, these sectors
will hardly grow any more in the future (with the same speed). On
the other hand, few industries like technology, machine learning,
renewable energy, electric vehicles etc are on the verge of the rapid
growth.

In this post, we are going to discuss five best sectors for long-term
investment in India for consistent returns. So, let’s get started.

Best sectors for long-term investment in

India –

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1. Information Technology (IT)

The 20th century was the era of manufacturing. From the 1990s to
2010, it was the time for the internet boom. And currently, it’s the
time for information. As a general matter of fact, IT companies are
growing at a much faster rate compared to the manufacturing
companies. And obviously, skilled employees in the information
technology industry are earning a lot more than those in the
traditional industries.

There are many factors that are boosting the growth of this industry
like technological advancement, economic needs, the Indian
government taking beneficial decisions (digital India) etc.
Considering these factors, the information technology industry can
be assumed to continue to grow. And hence IT stocks can be
treated as one of the best sectors for long-term investment in India.

Few of the major players like IT Industry like TCS, Infosys, WIPRO,
HCL, Tech Mahindra etc has already established a good brand
value and created huge wealth for its shareholders. Nonetheless,
these companies can still be considered as a safe bet for the long-
term. However, if want fast-growing stocks with good upside
potential, the mid-cap IT industry stocks are an amazing fit for long-
term investment in India.

Also read: 10 Best Blue Chip Companies in India: TCS At A

Whopping Rs. 7,32,521 Crore Market cap

2. FMCG (Fast-moving consumer goods)

Will the people still be using soaps, shampoo, surf, oil etc– 15-20
years from now? I think so.

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FMCG is the most defensive sector for long-term investment in

India. Most of the products in this Industry have been used by the
people for over 100 years and yet will continue in the future. Few
FMCG companies like HUL, Dabur, Emami, ITC, Nestle etc are
common names in Indian-houses. Majority of the people living in
Indian cities/towns have been using their product for a very long
time.

Unlike many sectors which follows the contraction and expansion

cycle, the products offered by FMCG industry will always be in
demand. During a recession or economic crisis, people may not
buy a new automobile or might not take new loans or avoid
investing in real estate/infrastructure, but because FMCG products
are the basic necessities- its demand won’t decrease as much
compared to the other industries.

In the past few years, these companies have also started growing
in the Indian rural areas/villages. Earlier, people in rural areas do
not like to use the products of FMCG companies. However, the
trends are changing these days. Therefore, these companies have
a very good growth opportunity in those areas area. If you are
looking for a safe industry to invest, then FMCG industry is one of
the best sectors for the long-term investment in India.

3. Housing finance companies

India is a growing country (in fact the fastest growing country in the
world). And housing finances companies or NBFC (Non-banking
finance companies) are going to play a crucial role in the growth
story of India. This is easily one of the best sectors for long-term
investment in India.

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Unlike major public sector banking companies in India, housing

finance companies are performing well for the past many years and
will continue to do so. They have actually a low NPAs (Non-
performing Assets) when compared to the PSU banks. Few major
players in this industry can be HDFC, LIC Housing Finance,
Indiabulls Housing Finance, GRUH Finance, and DHFL.

4. Automobile

It’s safe to say that the world (along with India) will run on electric
vehicles by 2030.

According to a CNBC report- The world’s fleet of electric vehicles

grew 54 percent to about 3.1 million in 2017. The forecasted
number of electric vehicles on the road around the world will hit 125
million by 2030. (Source: CNBC)

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(Image source: Bloomberg New Energy Finance)

Therefore if you are futuristic and want to invest in the best sectors
for long-term investment in India- you might not want to miss this
revolution.

Now, if you study electric vehicles, you will find that few important
parts which make the EVs are batteries, braking system & micro-
controller. Of course, other routine auto parts like body, tires,
driving system etc are also involved- but these three are the critical
ones.

For making electric vehicles successful, batteries should be

powerful and efficient to run longer distances without discharging.
Different companies are already working to improve the technology
of existing lithium-ion batteries.

Apart from lithium, aluminum is another metal which is going to play

an important role. Aluminum will be used in car structures as they
are excellent conductors. (Read more here- the electric vehicle
revolution will spur aluminum demand).

To summarise- here are a few companies that will be playing a

crucial role in the electric vehicle revolution —

Batteries: Amara Raja, Exide Industries, Eveready.

Metals: Hindalco, Vedanta, NALCO (National Aluminium Corp),

Graphite India, Hindustan Copper.

Auto Companies: M&M, Tata Motors, Maruti Suzuki, TVS Motors,

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Hero Motocorp, Bajaj Auto.

Note: Although auto ancillary companies (like Minda Industries,

Motherson Sumi etc) will also play a significant role, however, to
keep this answer streamlined, I didn’t not focused on them.
Nevertheless, even those companies have an amazing potential to
reward its shareholders in the long-term.

5. Infrastructure

When you go to a developed country, what is the first thing that you
notice? Big buildings, towers, flyovers etc, right?

For growing countries like India, the growth is the infrastructure is

the fastest. You might have already noticed the continuous work in
building new airports, railway stations, metro etc in India.
Infrastructure companies are the key players in the growing
countries and hence are obviously this sector of the best sectors for
the long-term investment in India. Few major players in this industry
are L&T, Adani Ports, GVK Infra etc.

Also read: How To Select A Stock To Invest In Indian Stock Market

For Consistent Returns?

Bonus:

6. Pharmaceuticals

It’s really impossible to ignore the pharmaceutical industry when we

discuss long-term. Although this sector is in bear phase for last few
years, however, they are few one of the best sectors for long-term
investment in India. With the evolving technologies, pharmaceutical
companies are investing heavily in their research and development

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activities. Many of these companies are consistently developing

better & cheap drugs and are also getting support from the
government. Few of the major players in this industry are Lupin,
Sun Pharma, Glenmark Pharma, Aurobindo Pharma etc.

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Bottomline:

Long-term investment in consistent industries can help you to build

great wealth to secure your future. Many large-cap companies like
Infosys, WIPRO, HUL etc has amazingly rewarded their loyal
shareholders. As an intelligent investor- it makes much sense to
invest in the growing sectors for long-term investment in India.

Nevertheless, an important lesson to learn here is that not every

growing sector is going to give amazing returns.

For example- Internet companies gave amazing returns in the

1990s and 2000s as they were growing at a good pace then.
However, the same was not true for the airline industries during its
peak.

The airline industries started growing at a good pace during the

1970s. It was considered revolutionary as people argued that it will
change the whole course of the transportation sector. And
obviously, the people were investing heavily in airline
companies. Although the industry did grow a lot in the past 50
years, however, hardly any airline company stock in India gave
consistent returns or became a huge multi-bagger.

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Therefore, while selecting the best sectors for long-term investment

in India- the best approach is to diversify. Allocate funds in different
sectors that you believe will grow -so that the risk is diminished and
you also don’t miss out any booming sector.

Hi, I am Kritesh, an NSE Certified Equity Fundamental Analyst. I’m

23-year old and an electrical engineer (NIT Warangal) by
qualification. I have a passion for stocks and have spent my last 4+
years learning, investing and educating people about stock market
investing. And so, I am delighted to share my learnings with you.
#HappyInvesting

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