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Top Sectors Expected To Outperform In FY24

24 Apr 2023

An Overview

According to the Asian Development Bank, the Indian economy would grow by 8% over the next 5-6 years, supported by a rise in private sector investment and increased public infrastructure investment. Motivated by the results of their previous fiscal year's investments, investors are willing to dedicate a considerable percentage of their savings to capital instruments in the coming years. They are also encouraged to invest in India's burgeoning businesses.

Many analysts believe that the Indian stock market will have evolved and grown to become the fifth largest in the world, with the highest market capitalisation. The market expands as a result of numerous stepping stones, such as foreign relations, government efforts, market dynamics, and so on.

Top Sectors Expected To Outperform In FY24

The following sectors are expected to perform very well in the coming years:

  • Renewable Energy

India aims to have 450 GW of renewable energy capacity by 2030, including 280 GW of solar power, 10 GW of biofuels, 5 GW of small hydropower, and 140 GW of wind power. With India's renewable energy industry rapidly developing in recent years, the country has made remarkable progress towards fulfilling this goal.

The implementation of solar rooftop programmes and the construction of ultra-mega solar parks are just two of the efforts taken by the Indian government to promote the use of solar energy. Furthermore, the building of offshore wind energy projects is one of the actions that the government has begun to stimulate the use of wind energy. In addition to wind and solar power, the Indian government encourages the use of other renewable energy sources such as small hydropower and biofuels. The country has a significant bioenergy potential, with an estimated 25 GW potential from solely agricultural waste.

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  • Insurance And Healthcare

India's demand for healthcare services is increasing due to an increase in chronic illnesses, an ageing population and an increase in disposable money. Furthermore, the pandemic outbreak has drawn attention to the need for enhanced healthcare infrastructure and services in India, promoting additional investment.

Ayushman Bharat, a programme that aims to provide health insurance to more than 100 million people, is one of the various initiatives undertaken by the Indian government to improve the healthcare business. In addition, the government has increased the healthcare budget, which has created investment opportunities and improved healthcare services. In India, the healthcare industry utilises cutting-edge technology such as electronic medical records, telemedicine and digital health platforms, providing firms with new growth opportunities.

  • Automobile 

The automobile sector contributes significantly to the Indian economy, accounting for 7% of India's GDP and employing millions of people. This industry includes manufacturers of two-wheelers, commercial vehicles, passenger autos and three-wheelers. The Indian automobile sector has recently encountered several challenges, including regulatory reforms, declining demand and a shift towards electric vehicles.

Nonetheless, the business is expected to rebound in the future years, driven by rapid urbanisation, rising earnings and more infrastructure investment. The government has established several other efforts to assist the manufacturing industry, including the Production Linked Incentive (PLI) programme.

  • Information Technology

Given the welcoming business climate and abundant supply of highly qualified personnel, India has long been a prominent player in the global IT sector. As a result, the country's IT market has been rapidly developing, with sales expected to top $300 billion by 2025. Several multinational enterprises outsource IT projects to Indian companies that are major software development and maintenance service providers.

The Indian IT industry has recently evolved towards more current technology such as artificial intelligence, cloud computing and the Internet of Things. The government has launched various initiatives to foster the development of these technologies in the country, and several Indian IT firms have made considerable investments in these areas. The Digital India programme, which aims to provide broadband access to all inhabitants and stimulate the use of digital technology throughout the country, is one of the efforts made by the Indian government to help the IT sector grow.

  • FMCG

Fast-moving consumer goods (FMCG) have seen tremendous expansion in India in recent years, owing to factors such as changing lifestyles, rising salaries and increased urbanisation. The industry provides commodities such as toiletries, packaged food and beverages and cleaning supplies. One of the important trends in the Indian FMCG business is the growing desire for healthy and organic products. As people become more conscious of their health, they seek out organic, natural and chemical-free items.

Several FMCG corporations in India are responding to this trend by releasing new products and investing in R&D in this arena. Another development in the Indian FMCG business is the increased emphasis on digital marketing and e-commerce. Because of the rise of online purchasing, some FMCG companies are investing in digital marketing and e-commerce platforms to reach out to clients directly.

Wrapping Up

It makes sense for a wise investor to make long-term investments in India's rising sectors. However, there is a crucial lesson to be drawn from this: not every expanding industry will yield spectacular returns. As a result, diversification is the best approach for identifying the top sectors in India for investing. Allocate funding to diverse areas that you anticipate will expand, minimising risk and ensuring that you do not lose out on any thriving industries.


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