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Indian Economy: Which Sectors Performed the Best or Worst in FY2023?

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Best Performing Sectors in India’s Economy in FY23

Worst Performing Sectors in India’s Economy in FY23


The Indian economy witnessed a rollercoaster ride in the fiscal year 2023, driven by global monetary policy shifts, heightened inflation, and geopolitical tensions stemming from the Russia-Ukraine war. As the financial year draws to a close, experts and market analysts are delving into the performance of various sectors and stocks, shedding light on winners and losers in India’s economy. Know about the sectors that performed the best or the worst, improving revenues or giving losses for Indian economy in FY2023.

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Best Performing Sectors in Indian Economy in FY23

These are some of the top Indian sectors that performed the best in 2023:

Banking and Financial Services

PSU Banks emerged as the stars of FY23, with Karur Vysya, UCO Bank, and Karnataka Bank leading the charge. Siddharth Oberoi, Founder and CIO, Prudent Equity, highlighted their remarkable performance, citing double-digit revenue growth and doubled earnings in the most recent quarter. This surge was fueled by a substantial reduction in provisions compared to the pandemic-hit previous year.

Read on – Indian economy in 2024: Financial Predictions by Top Experts.

The success of PSU Banks fostering Indian economic growth was underpinned by a significant reduction in provisions, a stark contrast to the previous fiscal year when elevated provisions were necessitated by the adverse impacts of the COVID-19 pandemic. Notably, these banks demonstrated a substantial improvement in their asset quality in Indian economy, although it still lags behind that of private sector banks. Stocks from the private sector, such as South Indian Bank and DCB, also outperformed their counterparts in the broader financial landscape.

Fast-Moving Consumer Goods (FMCG)

Surprisingly, the FMCG industry, often considered vulnerable to inflationary pressures in Indian economy, emerged as another star performer. Despite grappling with significant inflation, companies within the FMCG sector showcased resilience and growth. One standout example was Mrs. Bector Foods and Speciality, which entered the stock market at the end of 2020.

The company’s earnings surged by about 50% over the last six months, attributed to a combination of factors including the festive season, successful new product launches, and capacity additions. In the 9-month period of FY23, Mrs. Bector Foods and Speciality not only surpassed its FY22 profitability but also witnessed a remarkable 90% positive return on its stock.


While the overall IT sector faced challenges, there were notable exceptions that contributed to the sector’s positive performance. Companies like Cigniti Tech and KPIT Tech stood out in Indian economy with outstanding financial results. In a difficult climate for the IT industry, KPIT increased its profits by more than 30%, while Cigniti saw a doubling of its earnings over several quarters. Both companies had already surpassed their FY22 earnings in the first nine months of FY23.

The standout performances of select IT firms highlighted the sector’s ability to navigate challenges and capitalize on opportunities, underscoring the importance of company-specific analysis in understanding the nuances of sectoral performance.

Worst Performing Sectors in Indian Economy in FY23

These sectors in India took a hit or struggled in 2023, despite Indian economy booming on many fronts:

Information Technology (IT)

The IT sector, which had been a beacon of stellar returns since the onset of COVID-19, faced headwinds in FY23. While giants like Infosys and TCS continued to shine, the sector as a whole struggled. Notable exceptions like Cigniti Tech and KPIT Tech showcased outstanding financial results, with profits soaring by over 30% in a challenging climate.

On the flip side, Nifty IT and Nifty Metals found themselves in the underperforming category. A. R. Ramachandran, Co-founder & Trainer at Tips2Trades, attributed this to challenges in the global economy over the past year. However, he expressed optimism for FY24, especially for quality IT and metal stocks like TCS, Infosys, and Tata Steel.

Real Estate

The Real Estate sector, a vital cog in Indian economy, found itself caught in a confluence of challenges during FY23. Oversupply, rising interest rates, and sluggish demand contributed to a downturn that affected prominent players like Godrej Properties, Sobha, DLF, and Oberoi Realty.

The oversupply in the market, coupled with uncertainties in Indian economy, led to a cautious approach among potential homebuyers. Rising interest rates further deterred investment, creating a scenario where real estate developers faced an uphill battle to attract buyers. Regulatory changes and a slow recovery due to slowdown of India economic growth from the pandemic added to the sector’s woes.

Despite these challenges, the Real Estate sector is known for its resilience. As economic conditions evolve and stabilize, there is potential for a rebound. Government initiatives and policy changes could also play a crucial role in revitalizing the sector and helping Indian economy grow more in the coming years.


The Infrastructure sector, responsible for building the backbone of the economic development in India, encountered its share of obstacles in FY23. Companies engaged in developing roads, highways, airports, and other critical projects, such as SEZ IRB Infrastructure, Larsen & Toubro, and AdaniPorts, faced delays in project execution, funding issues, and regulatory hurdles.

The sluggish pace of project execution, attributed to bureaucratic red tape and funding challenges, hampered the sector’s ability to contribute significantly to Indian economy growth. Regulatory hurdles further complicated matters, creating an environment where companies had to navigate complex processes to move projects forward.

Read on: Indian Economic Growth Story: Top Factors Leading to India’s GDP Expansion in FY22/23.

Despite these difficulties, the Infrastructure sector remains integral to India’s long-term development goals. The government’s commitment to infrastructure spending, coupled with potential policy interventions, could be the catalysts needed to revive the sector and propel it toward sustained growth.

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As the curtains closed on FY23, the best-performing sectors in India economy showcased a blend of expected successes and unexpected triumphs. Banking and financial services, FMCG, and select IT companies demonstrated resilience and adaptability, overcoming challenges and capitalizing on favorable trends.

With Indian economy striding into 2024, it is essential to recognize the nuanced landscape that defines its sectors. As industry experts like Arun Chulani and Sachin Jasuja suggest, aligning investments with the underlying business cycles may be key to navigating the complex world of the Indian stock market. While Technology and Healthcare promise continued growth, challenges persist for Real Estate, Infrastructure, and Banking. Investors must tread cautiously, considering the diverse performances within sectors and the evolving economic dynamics.

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