The growing popularity of the stock market is out of no one’s notice. With the immense popularity, various sectors have emerged in the arena of the stock market. If you are looking to gain an insight into the multiple sectors in stock market, you are at the right place.
The growth is immense and has given rise to sectors ranging from healthcare, communication, technologies, and even real estate.
By the end of this article, you will understand the different sectors in stock market and the best ones to invest in.
Sectors In Stock Market India
The world of the stock market fascinates everyone, and maybe that is a reason you are here. The article here talks about the sectors in the stock market in India.
Like every other country, India has also carved a niche in the stock market area.
With the growing popularity, there are now different stock market sectors that can cater to all the investors’ needs and make it easier for them to manage their portfolios.
Before discussing which sectors to invest in, it is essential to know about the types of sectors in stock market (assuming you already understand the different types of stock market).
If you are interested in the stock market, then it is a possibility that you might have come across stock market sectors. But what are all sectors in the stock market available?
The Indian stock market is divided into various sectors that serve as the broad category for the different public trading companies.
Sectors make it convenient for the investors and portfolio managers to efficiently allocate the funds in the respective portfolios. Let us now look at the number of sectors in the stock market and the role they play.
How Many Sectors In Stock Market?
The stock market is growing at a tremendous rate and thus has been classified into various sectors. But the question here remains how many sectors in the stock market?
The stock market is categorized into 11 major sectors. The broad categories help the portfolio managers to make their work easier. The traders can choose according to their needs and then customize their portfolio by selecting multiple sectors.
Each sector of the stock market has different publicly traded companies. Each of the companies in the sector has unique dynamics that in turn affect profitability.
There are different ETF i.e Exchange Traded Fund that further helps you to achieve the asset allocation goals.
You can make use of different parameters that eventually help you in doing a proper analysis of stocks and hence taking investment in the right direction.
If you prefer to take less risk in the stock market, then you should start investing in Blue Chip Companies that carry less risk and high returns.
Different Sectors In Indian Stock Market
Now that we know the sectors and why they are essential, let us look at the different sectors in the Indian stock market and their use. The 11 diverse sectors in stock market are as follows.
Let us now understand every sector in a little detail to form a better understanding.
Everything related to investing, finance, and handling money is a part of financials. Financials include insurance companies, banks, real estate, funds, issuers of credit cards, etc.
Loans and mortgages are the two areas that yield the maximum profits when there is an increase in interest rates.
The stock market’s financial sector is a popular one and accommodates all the established and mature firms and companies.
The industry that involves the economy thriving on the increasing consumer demands is categorized into customer discretionary.
The sector includes media firms, apparel companies, etc., that serve as a luxury for customers and are not an ultimate survival demand.
As the name suggests, utilities are the companies that provide gas, electricity, renewable energy, among others. The utility sector is one sector that produces constant income by charging its consumers.
For example, an electricity company distributes electricity in a particular region, and then they will charge the consumers. The charges, in return, will produce recurring income.
All the technological industries, firms, software developers, and information technology companies are classified under the stock market’s technology sector.
The computer parts, microprocessors, and operating systems are all covered in information technologies. Companies like Microsoft are associated with the technology sector of the stock market.
Health care forms an essential part of every economy, making it a crucial stock market sector. The medicines, hospital management, pharmaceutical companies, manufacturers of medical devices, etc., are all covered in the stock market’s health care sector.
Johnsons and Johnsons is one of the big companies that is part of the health care sector. Several implant manufacturing companies are also a part of the health care sector of the stock market.
Every economy thrives on excellent and thriving industries. When it comes to the stock market, the industrial sector consists of a lot of companies.
This can range from the railway, airplane, and even weapon producing industries/companies.
The industries sector is one of the broadest industries and thus consists of 14 different sectors in it. The companies mostly include logistics, types of equipment, and transportation companies.
Communication is the base of every society, and thus the telecommunication sector helps different people stay connected. The communication sector can be broadly classified into two parts.
The first part involves wireless services, cables, and even the old wired telephone connections, helping people connect.
This sector’s role has enhanced in recent years as it also has an inclusion of the media and entertainment industry. This forms the second part of the communication industry.
The entertainment portals like Netflix, Prime videos are all a part of the communication sector.
Various companies provide oil and gas to the general public. The energy sector of the stock market covers such companies.
The industry includes gas and oil companies and the producers of various other renewable resources like ethanol and coal.
The sector also covers various companies that manufacture equipment for these sources of energy. The revenue generated by such companies is often associated with the price of natural oil, crude oil, and other such commodities.
Real estate is one of the different sectors in the stock market. The real estate sector broadly comprises two divisions. Various stocks are available to play a crucial role in setting up new properties and residences.
Further, these are put out for rent, and subsequent revenue is generated. The rent from these residential, professional, or other spaces is the primary income source in the real estate sector.
The sector responsible for providing goods for manufacturing and various other uses is classified under the materials system—a wide range of companies, including mining companies and chemical making companies.
The companies that are under this sector are placed at the very initial space of the regular cycle. This means that it can bring about some alterations in the entire business cycle.
Various products are unable for the consumers to remove from their expenses. This includes food companies and beverage companies. These companies are covered under consumer staples.
Even if there is an issue in economic growth, these companies can withstand it. Supermarkets, personal products, etc., all are a part of the consumer staple sector.
Best Sectors To Invest In Indian Stock Market
The wide range of sectors allows investors to pick and choose and then invest. Selecting the best sectors to invest in the stock market can be a little cumbersome at times.
Here is a guide to help you study and invest in the best sectors so that the return yields you the right amount of money. We will also see which sector is performing well in the stock market.
IT Sector– The sector of information technology is booming with every passing day. With more and more people getting access to the industry, the tech stocks might appear expensive for some users, but the constant growth makes it a great option to invest the money.
Health Care- With the increase in the average life, there are many advancements in the health care industry. There is always a possibility that the health care system will just advance and expand. It is advisable to invest in the health care sector to have guaranteed profits.
Consumer Staples- The food and beverage industry that is a crucial part of consumer staples can never run out of business. The investments made in this sector can never go in vain.
Consumer staples are commodities that the consumers are not ready to exclude out of their existing budget.
The best part about the consumer staples sector is that even if there is a subsequent downfall in the economy, you as an investor will not suffer much.
The stock market has grown immensely and thus given rise to various sectors as well. The stock market sectors are crucial as they make the management work easier for investors and portfolio managers.
The sectors help them put the right funds in the right portfolio. It is also often advised that investors should invest in various sectors to enhance the success rate.
The Indian market has eleven sectors that accommodate in themselves all the industries and companies. The sectors include financials, healthcare, real estate, energy, consumer staples, communications, among many others.
The different sectors cover a lot of different industries. Although the growth in every sector is almost the same, some sectors have high returns.
As the growing trend can witness, healthcare, consumer staples, and information technology are the three top sectors for investors. The returns are stable, and the failure rate is less.
The stock market can be a constant source of income if appropriately understood and invested in the right sector. It is essential to understand the sectors, research, and then invest in the right ones.
Thinking to open a Demat Account? Please refer to the form below