Petrochemicals Stocks

As India aims to achieve a $5 trillion GDP by 2024-25, the petrochemical and derivatives sector is set to play a crucial role. This sector serves as a foundation for agriculture, infrastructure, manufacturing, and services. It is a key driver of India’s economic progress and is expected to continue being a significant growth engine.

The chemical and petrochemical industries are essential for India’s development, contributing to various sectors. However, challenges like fluctuating feedstock prices and uncertain demand impact not only India but also global businesses. Currently valued at $190 billion, the Indian Chemicals and Petrochemicals sector holds a prominent position on the world stage.

India is not just the 6th largest chemical manufacturer globally and the fourth-largest in Asia but also exports chemicals to over 175 countries, making up 13% of the country’s total exports. The petrochemical sector in India has evolved significantly since its start in the 1970s and is poised for further growth and transformation in the coming years.

In the coming decades, the global demand for petrochemicals is expected to increase, and India is poised to contribute significantly to this growth. The chemical sector in India is outpacing the GDP, growing at a rate 1.2-1.5 times faster. The current estimate of the Indian chemical market is $178 billion, and it is projected to reach $300 billion.

The next decade is anticipated to bring in investments exceeding $87 billion into the sector, with India accounting for over 10% of global petrochemical growth. The government is actively supporting this growth through various initiatives, such as allowing 100% Foreign Direct Investment (FDI) through automatic pathways, creating Petroleum, Chemicals, and Petrochemicals Investment Region (PCPIR) zones, and setting up more than 10 plastic parks.

A new PCPIR strategy, to be implemented between 2020 and 2035, aims to generate a substantial investment of over $420 billion (Rs. 34 lakh crore) for the chemical sector in India. These measures are expected to further boost the industry’s development and contribute significantly to the global petrochemical landscape.

Before investing in the petrochemicals sector, there are several key factors to consider:

• Market Trends and Demand: Analyse current market trends and forecasted demand for petrochemical products. Consider factors like global economic conditions, geopolitical stability, and emerging market demands.

• Regulatory Environment: Understand the regulatory landscape in the region where you plan to invest. Regulations can impact operations, environmental compliance, and overall business viability.

• Supply Chain Dynamics: Assess the entire supply chain, from raw materials to distribution. Understand the logistics, transportation, and infrastructure involved in the petrochemical industry.

• Environmental and Social Impact: Consider the environmental and social aspects of petrochemical operations. Investors are increasingly concerned about sustainability and ethical practices. Assess how the company manages environmental risks and engages with the local community.

• Global Economic Conditions: Given the global nature of the petrochemical industry, be mindful of broader economic conditions. Economic downturns or fluctuations in currency exchange rates can impact the sector.

• Government Policies and Incentives: Stay informed about government policies and incentives that may impact the petrochemical sector. Some regions offer tax incentives or subsidies to encourage investment in specific industries.

• Cyclical Nature of the Industry: Petrochemicals can be cyclical, with demand affected by economic cycles. Consider the resilience of your investment to economic downturns and the ability of the company to navigate through industry cycles.

To invest in sector stocks via Angel One, follow these steps:

• Log in to your Angel One account.
• Click on the search icon and look for your desired petrochemical sector stock.
• Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
• To complete your transaction, click on the ‘Buy’ button.

You can track the status of the purchase from the ‘Positions’ section in the ‘Orders’ module. Once the stock is delivered, you can track its gains and losses from your ‘Portfolio.’