All The Sectors Of The Indian Stock Market
In a stock market, what are "sectors"? The Indian share market is extremely vast with several thousand companies listen on the exchanges. India's National Stock Exchange, for example, has more than 1900 companies on its list (NSE). And they are divided into 11 sectors. The firms work in many different fields. Sectors are a way to group companies on the stock market by the type of business they are in. Read on to find out more about the different stock market sectors, with a focus on the Indian equity space. Sector-wise separation Before putting money into a stock, investors have to do a hard job. It is to carefully analyse the stocks and understand how the stock as well as its sector is performing. When you know which books are on which shelves in a library, it's easier to walk over and pick the book that fits your interests the best. In the same way, when stocks are put into groups called "sectors," they are easier for investors to find. In the same way, sectors help investors figure out where they don't want to put their money. For example, when there is a pandemic and air travel is limited, investors might not want to put their money in the tourism or aviation industries. What are the stock market's different sectors? Some of the most important parts of the Indian stock market are: Agriculture & Commodities Aviation Automobiles Financial services and banks Electricals & Electronics FMCG Gas & Petroleum Infrastructure for Information Technology Pharmaceuticals Real Estate Telecommunications Textiles Tourism What are some of the most important sectors of the Indian stock market? Some companies are very well-known, while others are not. The good thing about sectors is that they help investors find hidden gems. Here are four of the most important stock market sectors that you need to know about: Automobile Sector There are more than just carmakers in this sector. It is also where commercial vehicles, two-wheelers, three-wheelers, and tractors are made. Since India is an agricultural country, people who invest in tractors and other commercial vehicles tend to be serious about them. Examples of leading automobile companies are Maruti Suzuki, Ashok Leyland, Bajaj Auto and Escorts. Banks and Financial Services The Banking sector is well known because it makes money from money. The banks' top line is made up of the cash flows of every other company on the market as a whole. This is because almost every other business borrows money from a bank to manage its capital structure. This is why profits from financial companies are different from profits from other types of companies. So, if you take a sectoral approach to investing, you can take this difference into account. Non-Banking Financial Companies (NBFCs), Asset Management Companies (AMCs), Ratings and Research Institutions and Insurance Players, as well as public and private banks, are all part of this huge sector. NBFCs work with people who don't have bank accounts. Mutual Funds are taken care of by AMCs. Rating agencies work on credit ratings and make money in other ways, like by selling research. Insurance companies pool small amounts of money from many people to cover the losses of a few. Examples: ICICI Bank, Bajaj Finserv, Nippon Life, AMC CRISIL This sector is worth keeping an eye on because it is about to get one of the biggest players in the insurance and fintech industries. Fast moving consumer goods In the FMCG sector, companies make things that we buy and use every day. These things are used up quickly. FMCG products guarantee a steady stream of income, which leads to steady profits and a strong return on investment. Examples: Hindustan Unilever, Britannia Manufacturing, Colgate Palmolive, Procter & Gamble The FMCG industry can handle a recession. So even when the economy as a whole was bad, the grocery stores near you would still be busy selling FMCG products. Pharmaceuticals Sector Some of the products that come from the pharma industry are biologicals, active pharmaceutical ingredients, excipients, vaccines, and cures for both common and rare diseases. Investors are learning more about the business because of the COVID-19 pandemic. The industry is heavily regulated because the products affect the health and safety of people all over the world. Examples: Biocon, Sun Pharmaceuticals. Pharmaceutical companies like Pfizer and AstraZeneca have a special advantage: they have unmatched pricing power. It goes without saying that there are rules in place to stop irresponsible behaviour. In short, sectors are groups of stocks that have similar business models. This lets investors focus on a certain industry and find a certain stock. The amount of information that investors have to deal with takes up a lot of their time. When investors use a sectoral approach to investing, they make sure to spend their time on the right group before focusing on the right stock. In addition to helping people learn more, sectors help find hidden gems in the field that might not have been known before.