UTILITIES SECTOR
There are many sectors in which equity shares fall into and utilities is one of the significant sectors among them. This sector comprises stocks of companies which are into different utilities services such as water, electricity, dams, gas, sewage etc. This sector is important because it has billion dollar capitalisation and is very close to the infrastructure of people in their daily lives. Every time we use a fan, we are using a facility of a utility sector entity.
In this article, we have presented a better layout of important aspects of the utilities sector so that our audience can gain a better understanding.
MEANING
The utilities sector is a category consisting of entities that provide basic necessary amenities including water, gas and electricity. The sector is heavily regulated on both the state and central level. Utility sector shares are stocks in companies within the utility sector. For instance, Reliance is one of the top 10 constituents or one of the biggest shares within this sector. A few other firms that are part of the sensex index are BPCL, ONGC Etc.
WORKING OF THE SECTOR
The utilities sector tracks companies' performance within the utility industry. Meanwhile most utility entities are regulated government companies others are contractually guaranteed and unregulated entities. Till now, utilities companies have also been a big source of employment for the country and according to the Indian government, this will keep growing in the coming years. Five main services that entities within this sector provide are water, sewage, gas, electricity and fuel.
ENERGY SECTOR SHARES VS UTILITIES SECTOR SHARES
The significant difference between both the sectors of energy and utilities are the companies within each industry and the task they accomplish. The utilities sector inculcates companies involved in the distribution and production of the utility sector to customers, whereas the energy sector inculcates companies involved in the exploration, production and management of resources such as oil, water and electricity.
SIGNIFICANCE FOR INDIVIDUAL INVESTORS
Since utilities are a much needed part of modern life, the utility sector is in very high demand. And hence, utility sector stocks are relatively stable investments. Moreover, the regulation of this industry and less competition in most regions make many utility companies' performance more predictable, which is again particularly helpful while investing.
You can begin investing in utilities sector companies through mutual funds or start investing in individual utilities companies.
KEY POINTERS
- Since utilities are basic needs and are always in demand, the industry as a whole is speculated to perform well and steadily in all economies.
- This sector is made up of securities in utility companies providing services in the water, gas, renewable energy and electric fields.
- Investing in the utilities sector can be typically a part of your long term investment strategy.
