Which Sector are you going to select for your Stocks ?


Which Sector are you going to select for your Stocks ?

Market Indices are at High, Global Economy, Trade war between the countries may affect the quarterly results of a listed companies. There is no doubt that the investment in good stocks will give the investor with an excellent return on a long term, but without the expectation of Short term trend.

Recently, the Banks and NBFCs are facing issues like NPA, Liquidity crunch and also with the bad news in Media. We cannot take and stand this as a healthy one for being an Investor. Even If we waiting for the upcoming Budget to the Indian Stock Market.

Whenever there are things that affect Economy and Quarterly results, it is better to choose good and valued stocks – Especially effective Sectors. Generally, Strong sectors and its stocks should not be affected by the global economic factors. We have few sectors like these,

  • Automobile
  • Banking & Financial Services
  • Consumer Goods (FMCG)
  • Pharma & IT Services

The said above sectors are easily understandable for most of us. We can look at the products or service sectors that we regularly watch and consume. Nowadays, Banking requirements is a necessity one and also needed for the Industrial Growth. Digital transactions are a welcome one for the Banking Services, this may give a clarity and help us an Investor. At the same time, it is important to consider the corporate management of the Banks.

Pharma and Technology are inevitable these days. The demand for these two sectors are too much. While the Infrastructure has not improved well, but the growing demand for transportation is a positive aspect for the Automotive Sector.

Sectors that are Seasonal and in Economic cycles are often depending on Global economic factors. Like Agriculture, Metals are the sectors – We cannot say that these sectors are regularly yielding cash. Such sectors may not have a consistent Sales and Profit growth in every quarters. Since Seasonal and demand-supply in Trade may vary according to requirement.

Cyclical Sectors:

  • Agriculture & Related
  • Chemicals
  • Metals

Instead of just looking at the Market and investing in a stock based on price, it is better to choose which stocks do better and which ones are not affected by the economic news. It is imperative to consider how the demand for the sector and the stock of the products we are going to invest in. That’s why we should to invest in a business that we know or understand easily. The same applies to any stocks or Sectors.

Few sectors may perform well in terms of all day of the year and Some may not. Some others are likely to change in the future. Such fields are relatively High Risk – Reward factor. Only if we understand these properly, then we can go for those stocks.

Risky Sectors:

  • Infrastructure & Realty
  • Media & Related
  • Oil Industry
  • Power Generation & Distribution
  • Textiles
  • Telecommunication

Like Power Generation and Distribution companies are likely to change in the near time. If the electricity generated by the Wind Power, then it can be changed to Nuclear and Solar Energy in the future. In this case, we should know how these sectors and companies are changing their scenario. Otherwise, the earnings are more likely to decline.

We can see the Telecommunications and Media are changing day by day. Reliance Communication, Vodafone, Aircel are the strugglers only by a modern transformation. Following Reliance Jio’s arrival, Airtel earnings have been impacted.

As the Agriculture sector is not in a good way, then how the textile industry alone can benefit. Crude Prices and Trade war play an important role in the growth of Oil Companies. India has a vast opportunity in Infrastructure, but most of the companies in this sector are facing Debt issues – due to no immediate changes in Policy.

Therefore, investing in a strong sector and valuable stocks based on Fundamental Analysis will inspire the investors in the economic stagnation.

Kindly share your views / comments with a smile 🙂



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