Which Stock Market Sectors Are Expected To Perform Well In 2022?

The fast-moving consumer goods or FMCG companies offer daily-use items. These items will always be in demand, no matter what the situation. These are mainly items of daily consumption, so it is not wrong to assume that the sector will continue to grow. Owing to this, one can expect promising results when investing in the top FMCG companies. You can also go by other companies along with the FMCG sector, some of which are IT, healthcare, infrastructure, retail, automobile, real estate and others.  

Will FMCG continue to grow in the future?

As you check the FMCG sector share price over the recent years, you will see its steady growth, and it was rupees 2 lakh crores in 2011 to almost rupees 4 lakh crores in 2017. This growth rate is continuing great with rising income and expenditure. The estimated growth rate of the sector is almost 15%, and the rate assures that it will continue even in the coming years. 

As e-commerce giants like Reliance, Tatas, Flipkart, and Amazon enter the market, they will surely contribute effectively to the FMCG sector’s growth. The Indian government has also encouraged steady sector growth, paving the way for its healthy future. In this regard, the government has offered incentives to support the sector and allows almost 100% foreign direct investment for some retail brands. 

There has been a reduction in corporate tax for the small, medium, and micro-enterprises, and it is sure to boost the sector, making it perfect for investment in long-term plans. However, the sector has come under the goods and service tax or GST sector, which will eventually benefit the sector. Thus, the rolling of GST has helped the industry make a prominent space and market better than before. 

Reasons to hold on to FMCG stocks

There are various reasons to hold on to the FMCG funds in your portfolio. Knowing this would help one invest in this sector carefully and get suitable returns. 

Rising competition in the sector 

Due to many new entrants, it has faced great competition in the market. As long as government policies are in favor of the sector, and there is stable demand for the products of this sector, it will continue to grow rapidly. This is how investors can expect a stable and good return from the sector and can understand how long it would continue in the future. Some of the latest product launches by companies have shifted focus to organic items. This proves that the competition is never-ending, which is how the FMCG companies will continue to hold a good position in the market.  

Increasing demand

The main reason for the sector’s growth is the 1.3 billion people who constitute almost 16 to 17% of the total population. In this, almost 60% of consumption comes from rural areas where the consumption rate has increased over the past few years, and it can be believed to be the impact of industrialisation. It is to go with government policies, and so, in this way, the sector will continue to grow in terms of valuation, promising the investors to quickly get healthy returns from it. 

Innovative features 

This sector shows significant development and innovation, which was previously not mainstream. While the startups are offering easy online shopping and delivery, the FMCG companies are upgrading their development facilities and trying to upgrade the service offered to customers. It is coming up with new products, and startups are also common in the FMCG sector, with several companies coming up and giving opportunities for a better scope of recruitment and others. 

The products and strategies used to gain better market share are evidence of its innovative approach to remaining focused on the rest of the market. The companies try to innovate based on market demand, consumer behaviour and survey research. The offers, product details and others are integral to these companies. 

Focusing on some other potential sectors 

1. Automobile 

The automobile sector is seen to claim its sales volume was affected due to the pandemic situation. This sector has strong backup from government schemes and incentives for the two-wheelers and the production-related incentive scheme launch. The backup will help the sector stand up again, overcome the challenges of pandemics, adopt advanced technology, and continue to offer better to consumers. 

2. Retail

There is a considerable transition owning to change and increased customer behaviour in demand. This sector has become more convenient to showcase and sell products online. As e-commerce is growing quickly, it is a promising sector that will continue to grow in the coming time. Ecommerce is the newest and greatest transformation that will continue to grow for the good of investors in the years to come. 

3. Real Estate 

This sector is recovering and can easily gain traction in the coming months. The demand has increased with the change in market circumstances. However, the situation amidst Omicron will be a little critical for the sales price to fall again. The online registration and digital marketing can overcome the obstacles again. Its growth has reached the desired level in the top cities such as Hyderabad, Bangalore, Pune, Mumbai and other top metro cities.  

4. Healthcare 

Given the situation the industry has faced in the last two years, it has successfully overcome all and yet continues to grow in future. The sector is now well-equipped with the latest technology machinery and planning to invest in digital healthcare facilities in the coming five years. It is almost 80% of the investment for expansion of this sector. The hospital business almost constitutes 80% of healthcare, and it will grow to 16 to 17% to $132.84 billion by the coming financial year.