These sectors will lead the market comeback: Top sectors to invest in

The stock market has been under pressure for the last few months as it tried to maintain its decline over the past 6 sessions, creating panic among investors as foreign investors continued to sell off and global uncertainties dampened market sentiment. 

Both the Sensex and Nifty indexes have decreased by approx. 10% from their 52-week highs, which marks a huge decline in the market slump. Before this, analysts expected a substantial recovery.

Analysts, however, believe there is value for those willing to adopt a long-term view towards certain sectors and stocks.

 

Top sectors to invest in 2025 Amid Market Recovery

While all news may be dark, a deep dive into sector performance reveals some decoupling indicators. Sectors that are domestically focused and highly rated for stable earnings with strong government support include infrastructure, banking, and housing finance. These are expected to perform no matter what the market conditions are.

 

 

1. Infrastructure

Infrastructure sector might continue to benefit from government-backed and large-scale projects that should help them grow.

The infrastructure sector is set to benefit from massive contracts placed by the National Highways Authority of India (NHAI). These contracts span several years and provide high revenue with stable growth for the company. As we have pointed out before, government spending in infrastructure in the last 2 to 3 budgets has provided scope for growth in these sectors.

 

2. Banking

The banking segment has shown strength with some banks registering growth in revenues and profits by double digits in the last quarter. Private banks such as HDFC Bank and ICICI Bank have managed to impress many investors with their earnings, even though the growth in deposits has tapered. 

On the public sector side, SBI continues to be the dominant player owing to its sustained earnings growth and improving asset quality and cost-to-income ratios.

 

3. Housing Finance

The housing finance companies are expected to boom with the 2024 budget's emphasis on affordable housing. The sector has seen a surge in loan disbursements that will not only support the sector's resilience to general market challenges but should continue to fuel growth in the domain. 

As the trend moves towards affordability in homes, housing finance companies have proven to garner huge revenues since increasingly, people will seek the subsidisation of loans as a channel for the purchase of homes.

 

4. Opportunities In The Consumer Sector

In the consumer sector, some firms such as ITC and Titan are performing well in this difficult phase. Because of their diversified approach, analysts favour ITC due to the company's hallmark business model. 

Also, Titan’s robust growth in the jewellery segment has made it appealing to long-term investors. However, analysts urge a more careful approach, particularly sector-specific stock picking.

 

5. Cement And The Potential of Recovery

A recovery in market demand has prompted interest in cement stocks as well. The combination of low demand and high competition in the sector during the first 6 months of FY25 caused the profit margins to squeeze. 

However, as capital expenditure (capex) projects are expected to pick up towards the second half of the fiscal year, demand is forecasted to improve. Stocks of cement companies are likely to improve with the advancement in existing infrastructure and housing projects.

 

Sectors to Avoid During Market Fall

However, several industries that are experiencing a downturn in growth, like metals, cement, and petroleum refining, are viewed as less favorable. The effects of growing costs, changes in global demand, and sector-specific difficulties may cause certain industries to perform worse. 

(Source: indiatoday.in)

 

Sector Analysis

 

(Source: Moneycontrol)

 

Conclusion

Although the stock market is undoubtedly facing headwinds, certain sectors appear to have growth potential. Infrastructure, banking, and housing finance might perform well because of supportive government actions. The consumer and cement sectors are, likewise, expected to improve as market conditions evolve. 

 

Disclaimer: No buy or sell recommendation is given. No investment or trading advice is given. This post is only for informational purposes. Always discuss with an eligible financial advisor before investing.