In the Indian stock market, there are investors who move beyond index funds to pick individual stocks. Whether you believe it or not but it is one of the most difficult initial tasks to perform in the stock-picking. In doing so, investors do fundamental analysis which includes various filters which should be applied to individual stock research. One of the crucial fundamental filters is industry analysis which also known by sector analysis. Nowadays many investors are buying stocks in fast-growing industries. It is because if one picks the right industry, then a strong industry tailwind can help an investor to get inflation-adjusted stock’s return over the long haul. So, if you are making a balanced portfolio then it is recommendable to invest in fast-growing industries.
Have you ever thought of investing in the automobile industry?
You must be wondering, why we mentioned automobile out of all other industries?
What’s the benefit of investing in an automobile company’s stock?
Well, that’s why we are today! Here, we are going to discuss briefly the current growth in the automobile industry. The Indian automobile industry which once braced itself for a long bumpy ride due to the economic slowdown, compounded by high fuel prices and interest rates now becomes the 4th largest vehicle market in the world.
Apart from this, the Indian automobile sector counts in world’s largest tractor manufacturer and second largest bus manufacturer. Indian automobile industry also holds the position as the world’s largest two-wheeler, three-wheeler manufacturer, the third largest heavy truck manufacturer, and fourth largest car-manufacturer etc.
The $74 billion automobile industry has two-wheelers as majority sub-sector in 2017-18. That explains why there are the majority of motorcyclists are on the road. It has changed the motorcyclists’ lifestyle completely. The reason why auto stocks are surging and industry is growing with time are because India has a large consumption of automobiles whether it is of the tractor in rural areas, public transport in cities, or of motorcycles for daily commuters who ride motorcycles to work or other places.
This high consumption will not only increase the earnings of automobile companies but also increase their stock price. It is the sector which also employs nearly 19 million people.
There are some other reasons to invest in auto stock in automobile industries such as:
- As with the growth in electric and autonomous vehicles, the country is also expected to become a leader in shared mobility by 2030.
- Besides, the country has also a significant cost advantage that attracts investment in the sector.
- Even the Indian government is also has supporting policies which aim to develop India as a global manufacturing center.
In order to keep the growing demand, several automakers have started investing in multiple segments of the industry during the last few months. Even the automobile industry succeeds to attract the foreign direct investment (FDI) worth of US$17.4 billion in last year.
Now it has near 5% shares in total FDI inflows.
If you take a close look at the stats of government policies in boosting auto manufacturing sector, foreign direct investment equity inflow into the automobile sector of Indian stock market and the positive outlook of automobile’s industry, you will notice that it is a high-growing industry in these days with future potential. The automobile is one of the industries which can provide great returns in the long-haul.
However, the last decision is yours!
If you have any query or would like to add something then doesn’t forget to mention in the comment section below.