Best Stocks To Buy For Long Term Investment

Aug 03, 2017 | 05:21 PM IST

The last couple of months has given investors many reasons to smile. Nifty and Sensex have reached milestone numbers in a quick succession. Nifty's journey from 8100 to 10100 happened in a matter of just 7 months. In the same line, the benchmark index--Sensex--is also crunching the numbers with the same zeal. Looking at the data, one wonders--has the mother of all bull runs, that everyone had been talking about, started already? It certainly seems so. But the question that you need to ask yourself is--has your portfolio grown along with the Indexes? From year-to-date, Nifty grew around 24%. If your portfolio shows any less growth then you need to put your stocks and investment strategy under immediate review.

Without beating around the bush, let's take the question head on--What are the best long-term stocks to buy in India?

Instead of giving away the stocks that will do well in the coming days, we will try to take an analytical look at the stock and the corresponding sector which will give us an insight of why the growth is expected and how long will this growth last.

The Sectors In Focus

The market moves because there is a lot of movement in certain sectors. All the time, there are some sectors which perform better than other. In the recent past, there have been two sectors which are particularly stand out due to their exemplary performance. These sectors are - Chemicals & Fertilisers and Steel. Upon analysing these sectors we will get to know the growth factors and also the growth potential of the stocks in the sector.

Chemicals & Fertilisers - At this point, there are various reasons why Chemicals & Fertilisers sector is doing well. First and foremost reason is that the monsoon is good and the demand for fertilisers in on the higher side. However, the good monsoon will only support the sectors for a quarter or two, but what makes this sector good for long-term investment? True, as a smart investor you shouldn't make the buying selling decisions based on seasonal triggers.

The good news is that along with good monsoon, the sector is also getting plenty of help from the government. The government of India recently announced its fertiliser policy. In this policy, it has made it clear that it will extend all the support to the domestic producers. It will also provide financial support to some defunct companies to get them back on feet. The government is planning to restart some of the idle plants owned by The Fertilizers Corp. of India and Hindustan Fertiliser Corp. The government's intervention always works in the favour of the sector.

The reason government is so aggressively venturing into Chemicals sector is that it wants to become self-sufficient in the production of chemicals. On the global front, the demand for nitrogen fertilisers is expected to rise up to 5.6% to 119.4 million tonnes in 4 years. The government is looking at this rising demand as a window of opportunity and empowering domestic players to ramp up the production. This clearly indicates government's long-term vision and subsequently, it will benefit the chemical companies and the investors.

Stocks To Watch In Chemical & Fertiliser Sector - The performance of Chambal Fertilisers, Gujarat Narmada Valley Fertilizers & Chemicals Limited (GNFC) has been quite good.

Steel -- is not as popular a sector as banking, Information Technology (IT) and Pharma. It's not that it hasn't given returns to the investors, it has, however, it was going through a lean phase for quite a while. But in stock market, every sector stages a comeback some time or other, and it seems, the steel sector is on the verge of making a grand comeback. The events of the last couple of quarters combined with government's policies have brought good days for the steel stocks. If the buzz is anything to go by, then it seems that steel stocks hold quite a promise for the investors in the near and long-term future.

Let's shed some light on why we think steel would be a good sector in the future and we will also try to find the steel stocks which promise good returns.

Why Steel Stocks Will Surge?

The most prominent reason that works in the favour of steel sector is--government's focus on infrastructure development. Infra development consists of building highways, flyovers, subways, etc. Steel being an essential element for infra development, it is only natural that its demand will go up. On top of that, the government in its steel policy of 2017 focuses on giving prominence to domestic steel producers. If you add these opportune developments, it gives a clear hint that steel sector is about to take off. Also, schemes like Pradhan Mantri Awas Yojana, which provides subsidies to citizens of certain income level and "Smart Cities" plan which emphases on upgrading and developing civic amenities and urban infrastructure, will give a decisive push to steel sector.

Stocks To Watch In Steel Sector - Tata Steel, Kalyani Steel and JSW Steel

How To Choose Long-Term Stocks?

Every stock in its life span goes through several ups and downs. In between, there are so many things which propel its movement e.g. quarterly results, a sudden slump or rise in a certain sector, change in the management, etc. When you buy stocks with the long term perspective, you have to take into account all these roadblocks and also the fundamentals of the company which has to be solid enough to sustain the bumps of the stock market.

In short, finding long-term shares is a Herculean task. One needs to have thorough understanding equity market and analytical skills. So, if you want to invest in stocks but don't have time to research, it's a good idea to subscribe to a stock advisory firm.

Disclaimer - The stocks mentioned in the above article are only to illustrate the point in the context of the article. In no way, readers should look at these stocks as recommendations of Niveza. Stock recommendations are sent only to the registered customers via official channels i.e. SMS and Email.



Niveza Editorial Desk : We are a team of stock market nerds trying to stay ahead of the herd. We spend our grey cells everyday to pave a smooth road for our clients in the shaky world of stock market. While...



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