Stocks to Avoid From Which Sectors

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 STOCKS AVOID

1)The Utility Sectors

2) Commodities Sector

3) Public Sector

4) Business To Government

Now Understand one by one below-

UTILITY SECTOR

Utility means the things which are used regularly by everybody like water, air, electricity, internet, mobile, Oil. Without these things in todays world no one can live. So if prices get increased, the inflation will also rise for which common will suffer. In this case government will come to the rescue and will cap the price of these things. So as a investor even though i know data consumption is getting increased i will avoid such companies of Telecom, Power sector. 

COMMODITIES SECTOR

Companies which produce and market  Mineral, Metal, Mines, Oil companies don't have much pricing power. They are having capital intensive companies. Take into consideration of cement companies they can not sell a bag of cement at Rs 500 when others are selling in Rs 355. So they have to sell at around Rs 355 to Rs 360. Also for example all oil marketing companies sell oil having uniform prices. So they do not have much pricing power. They are operating with optimum cost cutting so they can earn profit. Even something happen in china their inventory will get piled up. Oil price can not be increased arbitrarily. Also cycle comes into play in commodity sector- sometimes demand for steel grow and sometimes there is nascent demand for steel.

PUBLIC SECTOR

These are not meant for profit making rather used for providing services. Take example of HDFC bank, it's sole objective is share holder wealth maximisation. This only objective can not be attributed to the public sector undertakings. Also government or DFS is busy in so many things is not able to manage things properly. Take example of Airindia and BSNL everything is messed up. So as an investor i will avoid every government company for investment. So i will avoid all government companies like LIC, IRCTC, COAL INDIA etc.

BUSINESS TO GOVERNMENT (B2G)

Avoid the companies who is only dealing with government for the sole income. This puts them in hurdle to repay the supplier of raw material. Sometimes bill is pending with the government. In the mean time if government gets changed then it becomes to get the bill cleared. Over dependency on the government will not make your business grow. If a company only produces AC for the railway only and railway takes more time to clear the bill then it will be difficult for him to run the business. So avoid such stocks.

Also avoid the companies which are over leveraged means taking much more loan from the bank and other financial institutions. The company should have invested more equity from owners. The company should able to handle the finances efficiently.

Reference:-

https://www.youtube.com/watch?v=FqkKXuLpCPQ

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