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Top Sectors for Long Term Investment – Find Best Long Term Investment Sectors in India

Last Updated Date - Mar 22, 2023

Investment has many types, among them Long Term Investments reigns on Top. In this Article, we will discuss about Top Sectors for Long Term Investment in India. We will go through various sectors where Long term investment has given decent returns.

Lets have a detailed analysis of Best Sectors for Long Term Investments in India.

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Best Sectors for Long Term Investment

While discussing about how one can diversify their portfolio, we have analyzed the sectors in which one may make an investment.

One needs to analyze all the sectors which may enable a satisfactory return in the long term. In order to make money in the stock market in the long run, one needs to invest their money in the growing sectors or industry.

Here we will analyze the top competitive factors that shape every industry and help to determine the weaknesses and strengths of any specific industry.


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    Top competitive factors

    There are many sectors across the world. They have different revenue models, i.e. how the company makes money, profitability, marketing strategies, etc.

    According to Porter, there are five undeniable forces that play a vital role in every market and industry in the world, and they are as follows:


    Competition in the market or industry

    In every industry or sector, there is a chance of competition, it is basically inevitable. Every business faces competition from other rivals.

    It is a great concern for any company or business person about how strong the competitors are. Any Individual, as an investor should check and verify the ability of the peer companies competing in the same industry.

    One needs to check out the capital structure, business model, the quality of products or services which the companies sell. In some businesses, the competition is at the highest level possible.

    In such situations, companies offer products or services at discounted prices. But, if a company has no rivals or if the business has no competition, the company will enjoy a monopoly and gain profits easily.


    Supplier Power

    Companies run businesses by procuring raw material and then turn them into products or finished goods, and then sell them to the consumers.

    The company procures the raw material from a supplier. There may be many suppliers for the same raw material. A businessman needs to check whether the suppliers can increase the price of the raw materials.

    This adversely affects the profit margin of the respective companies or the businesses. Now, if the prices of any raw materials or any other equipment’s are more expensive from one supplier, companies usually prefer to go to different suppliers with lower pricing.

    Thus the company may shift from one supplier to another according to their needs and profit margins. If the number of suppliers is low the companies will become dependent on them. The suppliers are in a stronger position. This may impact the company’s profit.


    Buyer Power

    The income generated is by the products and services offered or sold by the companies. A businessman should check how many buyers the company has, especially the regular ones.

    One can figure out the prices offered by the company they want to invest in comparison to the rival companies. The higher number of customers a company has, higher is the power of the respective company.

    One needs to ensure that whether the company gives quality services at an attractive rate so that the customers do not move to the rivals.

    Now we will make use of the above mentioned factors to analyze the industry and find an investment opportunity in the sectors for a long horizon.

    If a businessman wants to invest in any sector or stock, they need to consider the future potential of the sector, competitive advantage, whether the demand of the sectors or products will remain constant in the near future, the growth possibility, if the mentioned industry or sector has any strong entry barrier, etc. before making an investment, one needs to consider the above mentioned points.


    Top Sectors for Long Term Investment in India

    Here are the 3 major sectors which are any time Best for Long Term Investment –

    1. Banking Sector
    2. Information Technology (IT)
    3. Fast Moving Consumer Goods (FMCG)

    Banking Sector

    The banking sector is the basic pillar of the Indian stock exchanges. Banking sector comprises of Government banks and private banks and many other financial institutions.

    Among all the banks, only nineof them make their stocks available for the public. There are nine banking stocks which have been listed in the benchmark index NIFTY 50.

    These stocks altogether occupy 18.56% percent to NIFTY 50. Government banks have been approved of a huge amount of loan of Rs. 80,000 Crores by the central government of India. This fund is provided as a recapitalization for all the banks and the bad loans.

    Today, every bank’s stock is considered bullish, that is, it will increase in price in the future, by many experts, and it is recommended that you buy and hold banking stocks for as long as possible.


    Information Technology (IT)

    The modern age is known as the age of technology. Everything is being now operated by technology. IT or Information Technology is the most growing sector of all owing to technological advancement, economic needs, and Government Initiatives like Digital India.

    Day by day, human life is getting dependent on the IT sector. There is a very high demand for information technology everywhere and this sector has a huge scope to grow.

    All the companies operating in this sector have performed well and delivered robust performance year on year and will continue the pace in the near future. Bottom line, IT stocks are a very reliable option to invest in, for long term because there is assured growth.


    Fast Moving Consumer Goods (FMCG)

    FMGC refers to those items or products which are utilized by anyway for human living on day to day basis.

    Actually, FMGC includes all the basic items or products necessary required for living like various foot items, beverages, cosmetics, etc.

    All the things required for basic human survival will be required in the future also. So, companies producing these are always a safe bet. These companies will profit in the future too.

    During a recession, people may not buy automobiles, may not invest in real estate, may not withdraw loans, but will not stop using FMGC products. So, the demand for FMGCs will not decline in any situation.


    Best Sectors for Long Term Investment – Conclusion

    In conclusion to this article, Investments made by people in stocks are supposed to give them good outcomes either short term or in the long term.

    This article lists out a few of the best long term investments. The sectors mentioned above are the best and the safest bets for investors to get positive outcomes, and huge profits in the long run, for long term investments.


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