Top 3 Best Performing Sectors in the Indian Stock Market: Future Prospects for 2023

The top sectors in the Indian stock market that are the best performing are health and insurance, FMCG, Real Estate, IT, Infrastructure sectors, etc.

Best Sectors in the Indian Stock Market

The Indian stock market has doubled in the last 5 years. BSE Sensex increased from around 34,000 in mid-December 2017 to 60,000 in mid-December 2022. The annual return of Nifty 50 was 12.02%, 14.17%, and 24.12% in 2019, 2020, and 2021 respectively. The prospects of the Indian economy are getting better. The Indian economy will become the third-largest economy in the world. Do you want to gain from this emerging India story? If yes, then which sectors should you invest in? Learn about the top sectors in the Indian stock market to make maximum gains in the future.

Which are the Best Performing Sectors in India?

As an investor, you should always invest in the top sectors in the stock market to make maximum profit. Once you zero down the best performing sectors in India, you’ve to choose the sector-specific stocks having good fundamentals.

The Indian economy is expected to grow from a US$3.4 trillion economy to an US$8.5 trillion one in the next ten years. You may check this interesting video showing how India will become the second-largest economy (in terms of nominal GDP) by 2050. That's why it is the best time to invest in the best sectors in the Indian stock market.

The top three sectors in the Indian stock market are:

1. Health and Insurance Sector

Healthcare has grown by 22% CAGR in the last six years. After the outbreak of Covid-19, this sector has witnessed tremendous growth. Estimates of Invest India suggest that by the end of 2022, the health sector will grow at 16-to-17% to become US$372 billion.

As healthcare (out-of-pocket expenditure) is costly in India, the demand for health insurance has increased by leaps and bounds. In 2021, the insurance premium percentage jumped by 4.2%.

Major stocks in the health and insurance sector are:

  • Abbott India
  • Cipla
  • Apollo Hospitals
  • Dr. Reddy’s Lab
  • Divi’s Laboratories

2. FMCG Sector

This is one of the most secure sectors in the Indian economy. The FMCG sector deals with essential products such as:

  • Consumables
  • Packaged foods
  • Toiletries
  • Beverages
  • Dry goods
  • Drugs, and many more

People may hold on to their vacation plan, real estate sector investment, or purchase of luxury goods. But they will buy essentials. Despite the national lockdown due to covid, the FMCG sector in India grew at a 9-year high rate of 16% in the 2021 financial year.

This sector is expected to grow at 14.9% CAGR during 2020-2025 to reach US$ 220 billion. That's why FMCG is one of the top sectors in the Indian stock market to invest in the future.

Major stocks in the FMCG sector are:

  • Hindustan Unilever
  • ITC
  • Adani Wilmar
  • Marico
  • Dabur India

3. Infrastructure Sector

In the 2022-23 budget, the Indian government announced a heavy infrastructure investment. Indian Finance Minister Nirmala Sitharaman has announced a ₹ 10-11 lakh crore budgetary outlay for infrastructure investment. It accounts for 45% of the ₹ 20-22 lakh crore target annual investment. The state governments and extra-budgetary sources will invest the rest.

Reports say the investments will be made mainly in building:

  • Railways
  • Roads (including highways and expressways)
  • Airports
  • Ports
  • Shipping
  • Logistics
  • Aviation
  • Mass transport
  • Waterways

If you are looking for a sector that will give you a long-term investment benefit, invest in the stocks of the infrastructure sector.

Major stocks in the infrastructure sector are:

  1. L&T
  2. Reliance Infrastructure Limited
  3. Adani Ports
  4. Hindustan Construction Company
  5. IRB Infrastructure Developers Limited

Besides these three leading sectors, you can also invest in stocks belonging to the Information Technology (IT) sector, real estate sector, renewable energy sector, automobile sector, fintech sector, and many more.

Conclusion

Chetan Ahya, the chief Asia economist of Morgan Stanley, has said that India’s GDP would double in the next 10 years. If you want to gain from emerging India, choosing stocks from top sectors in the stock market is prudent. You can create a portfolio of stocks from various industries that can provide you lucrative returns in the next 10-15 years.

You have to remember that all stocks in the best-performing sectors in the Indian stock market may not provide the best return. So, explore the fundamental strength of stocks before investing. Check the balance sheets, fundamental ratios, P&L accounts, cash flow statements, and other fundamental factors before investing. Explore more on stocks here.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

The Indian stock market has doubled in the last 5 years. BSE Sensex increased from around 34,000 in mid-December 2017 to 60,000 in mid-December 2022. The annual return of Nifty 50 was 12.02%, 14.17%, and 24.12% in 2019, 2020, and 2021 respectively. The prospects of the Indian economy are getting better. The Indian economy will become the third-largest economy in the world. Do you want to gain from this emerging India story? If yes, then which sectors should you invest in? Learn about the top sectors in the Indian stock market to make maximum gains in the future.

Which are the Best Performing Sectors in India?

As an investor, you should always invest in the top sectors in the stock market to make maximum profit. Once you zero down the best performing sectors in India, you’ve to choose the sector-specific stocks having good fundamentals.

The Indian economy is expected to grow from a US$3.4 trillion economy to an US$8.5 trillion one in the next ten years. You may check this interesting video showing how India will become the second-largest economy (in terms of nominal GDP) by 2050. That's why it is the best time to invest in the best sectors in the Indian stock market.

The top three sectors in the Indian stock market are:

1. Health and Insurance Sector

Healthcare has grown by 22% CAGR in the last six years. After the outbreak of Covid-19, this sector has witnessed tremendous growth. Estimates of Invest India suggest that by the end of 2022, the health sector will grow at 16-to-17% to become US$372 billion.

As healthcare (out-of-pocket expenditure) is costly in India, the demand for health insurance has increased by leaps and bounds. In 2021, the insurance premium percentage jumped by 4.2%.

Major stocks in the health and insurance sector are:

  • Abbott India
  • Cipla
  • Apollo Hospitals
  • Dr. Reddy’s Lab
  • Divi’s Laboratories

2. FMCG Sector

This is one of the most secure sectors in the Indian economy. The FMCG sector deals with essential products such as:

  • Consumables
  • Packaged foods
  • Toiletries
  • Beverages
  • Dry goods
  • Drugs, and many more

People may hold on to their vacation plan, real estate sector investment, or purchase of luxury goods. But they will buy essentials. Despite the national lockdown due to covid, the FMCG sector in India grew at a 9-year high rate of 16% in the 2021 financial year.

This sector is expected to grow at 14.9% CAGR during 2020-2025 to reach US$ 220 billion. That's why FMCG is one of the top sectors in the Indian stock market to invest in the future.

Major stocks in the FMCG sector are:

  • Hindustan Unilever
  • ITC
  • Adani Wilmar
  • Marico
  • Dabur India

3. Infrastructure Sector

In the 2022-23 budget, the Indian government announced a heavy infrastructure investment. Indian Finance Minister Nirmala Sitharaman has announced a ₹ 10-11 lakh crore budgetary outlay for infrastructure investment. It accounts for 45% of the ₹ 20-22 lakh crore target annual investment. The state governments and extra-budgetary sources will invest the rest.

Reports say the investments will be made mainly in building:

  • Railways
  • Roads (including highways and expressways)
  • Airports
  • Ports
  • Shipping
  • Logistics
  • Aviation
  • Mass transport
  • Waterways

If you are looking for a sector that will give you a long-term investment benefit, invest in the stocks of the infrastructure sector.

Major stocks in the infrastructure sector are:

  1. L&T
  2. Reliance Infrastructure Limited
  3. Adani Ports
  4. Hindustan Construction Company
  5. IRB Infrastructure Developers Limited

Besides these three leading sectors, you can also invest in stocks belonging to the Information Technology (IT) sector, real estate sector, renewable energy sector, automobile sector, fintech sector, and many more.

Conclusion

Chetan Ahya, the chief Asia economist of Morgan Stanley, has said that India’s GDP would double in the next 10 years. If you want to gain from emerging India, choosing stocks from top sectors in the stock market is prudent. You can create a portfolio of stocks from various industries that can provide you lucrative returns in the next 10-15 years.

You have to remember that all stocks in the best-performing sectors in the Indian stock market may not provide the best return. So, explore the fundamental strength of stocks before investing. Check the balance sheets, fundamental ratios, P&L accounts, cash flow statements, and other fundamental factors before investing. Explore more on stocks here.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

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