In 2022, the best sector to invest in | Motilal Oswal

Best sector to invest in 2022

The pandemic left economies all over the globe struggling to maintain stability. It has also left investors uncertain as to where they should invest their money. This year will further test the tenacity of the Indian market and investors will have to be extra cautious about stock selection. Last year ended on a high note with Sensex has gained 22% and Nifty 24% respectively. While the predictions for 2022 seem promising, analysts have warned investors to be cautious as the market may face several headwinds. The overarching expectation is that the Indian economy will manage to maintain above-average market valuations. That being said, some sectors are more likely to outperform others in the coming year. Read on to know which sectors you should invest in 2022. 

  • Which Sectors Are Likely to Perform Well in 2022?

Analysts expect India to be the fastest-growing economy in 2022. The infrastructure that was put on hold in 2018-2019 is expected to take off in 2022. In light of this these are the sectors that are likely to do well this year:

  • Banking Sector: Experts predict that the financial sector, banking in particular will do very well. The expectation is that the credit growth from 6% to 8% will likely hit double digits, making banking a good sector to invest in.
  • Industrial Sector: Capital goods recovery is slowly but surely ensuring that industrials are making their way back up. While this starts with the public sector, the private sector is also expected to catch up soon as the output gap gets smaller.
  • Real Estate: With new offerings coming up in the form of affordable housing, residential real estate looks like a promising sector to invest in. Aspects like deleveraging and inventory clean up have been good, and interest rates on home financing have also been low. As a result, there is a growing pool of buyers and investors alike. 
  • Automobile Sector: While some experts may disagree, a contrarian take for more adventurous investors is the automobile sector. Replacement demand is likely to increase, particularly with regard to commercial vehicles. The EV segment is also growing in India and could be a lucrative sector for those willing to hold and observe the industry. 

Conclusion

Over the next few months, the market direction will be influenced mainly by domestic factors such as the Union Budget that will be presented on February 1st. The consensus seems to be that the financial sector, industrial sector, capital goods will do well in 2022. Pharmaceuticals are also looking to make a mark, and a few experts have placed their bets on real estate and automobiles while others have advised against them.

Ultimately, every investor should assess their own goals, risk profile, portfolio management and investment strategy. With enough research, the right tools and some expert insight, 2022 can be a very promising year for many.

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