India’s Key Growth Sectors

India’s equity markets are being driven by fundamentals in the form of robust economic expansion which is leading to strong earnings growth. As active investors, we focus on identifying both growthier and quality stocks. We believe the following key sectors will both support and be beneficiaries of growth in the Indian economy in the medium and long term.

Manufacturing and Industrials

Manufacturing and industrials stand tall as areas that are benefiting from government incentives and a surge in infrastructure spending. The government’s “Make in India” policy and reforms are bolstering the country’s manufacturing prowess, attracting foreign investments and fostering domestic production capabilities. As India reduces its reliance on imports and boosts exports, manufacturing is set for significant growth over the next decade, in our view, propelled by skilled labor, infrastructure improvements, and technological advancements like artificial intelligence (AI) and automation. Manufacturing and industrials have offered growth opportunities in the past but we now see them as secular growth areas. 

Health Care

India's pharmaceutical industry is experiencing a cyclical upturn, with companies advancing in product complexity and innovation. Contract development and manufacturing organizations are also deepening partnerships with global firms, cementing India's position as a pharmaceutical hub. The sector's long-term growth prospects are being enhanced by a confluence of structural opportunities and cyclical advantages which has helped increase our conviction in this space. 

Financial Services

Financial services is a stalwart sector that has supported India's economic expansion. Credit growth has been pivotal in fueling economic progress and financial institutions play a crucial role in supporting diverse funding needs across households, small businesses and startups. Robust data collection and digitization of various internal and consumer-facing processes has made the sector much more efficient. India remains a credit-underpenetrated market so we think financial services is a significant long-term secular story.

Consumer Discretionary 

We believe India is at an inflection point where domestic purchasing power will increase significantly and this will lead to very strong growth in consumption. We are also confident there will be stronger growth at the higher value end and think premiumization will be a distinct secular trend for the next decade. 

Real Estate 

We think there are secular themes and opportunities in India’s residential real estate market where home ownership is increasing and sales are robust. This expansion is being driven by increases in per capita GDP and accumulating individual wealth. Upgrading and value enhancing of properties is commonplace in urban areas where we also see strong growth in subsectors like luxury apartments.