Over the last decade or so, the infrastructure sector in India has attracted large amounts of investments. With the country’s concentration on infrastructure development, Nifty Infra has proved to be a good investment area. In this article, we explain why Nifty Infra is the next big thing for long-term investors in infra-assets.
The Growing Importance of Infrastructure
The development could not be minimized, especially as regards any nation’s infrastructure. These are bearing physical infrastructure through which other infrastructures are transported via road networks, bridges, ports, and power supply. In India, especially at present, infrastructure development has received a major focus from the government. This focus is well captured in the National Infrastructure Pipeline that seeks to develop and finance more than ₹100 lakh crore of sustainable infrastructure pipelines in the coming several years.
Promising Growth Prospects
The infrastructure requirements in India remain very high. The population of the country is increasing, and more people are moving to urban areas, which consequently calls for demand in shelter, transport, and utilities. As a result, a large portion of government expenditures is being dedicated to satisfy these demands.
Besides, as the government invests in infrastructure projects, the effect on the rest of the economy is seen. This leads to an increase in related industries like cement and steel, which are fundamental in infrastructure creation. Thus, the investors of Nifty Infra have a two-pronged or a four-pronged, depending on the approach they take, growth strategy.
Benchmark for Nifty 500 Share Price
The shareholders consider the Nifty 500 share price in order to derive the performance of the market. Here Below given graph shows that Nifty Infra has a strong correlation with the Nifty 500 index. In fact, the performance of Nifty Infra is influenced by the Nifty 500 index. Generally, when infrastructure-related projects start getting rolling, the corresponding movement is seen in the Nifty 500. Hence, coming to point two, buying any stock from the infrastructure index such as Nifty Infra can be strategic for those who wish to invest in a pattern that would reflect the trends in a broad market.
Risk Factors to Consider
The following risks are associated with investing in Nifty Infra. Infrastructure projects are mainly capital-intensive projects and can sometimes take time due to regulatory or financial constraints. The other factor is that in a recession, various organizations and governments reduce their expenditure on infrastructure. But these risks can be well managed by the long-term investment needs with a diversified investment portfolio and the companies that are present in the Nifty infra index.
Conclusion
Nifty Infra is on its way to emerging as the next Reliance or the Torrent for long-term infrastructure Investment. Because of the infrastructure development that the current government has embarked on, good future prospects for the company, and its association with the Nifty 500 share price, it is worthwhile to invest in the company. Since the Indian economy is expanding its investment in the infrastructural developmental sector, the increasing investors of stocks in Nifty Infra are likely to be placed in the privileged spot.
