NISM Certifications · NISM-Series-XV: Research Analyst · Industry Analysis
Which of the following is a cyclical industry from an analyst's perspective?
Automobiles and capital goods are cyclical because demand for big-ticket and investment purchases rises strongly in expansions and falls sharply in slowdowns, whereas staples, chronic medicines and utilities have stable demand.
- APackaged staple foods
- BAutomobiles and capital goodsCorrect
- CPharmaceuticals for chronic diseases
- DElectricity distribution
Explanation
Cyclical industries sell discretionary or investment goods whose demand swings sharply with the business cycle, such as autos and capital goods. Staples, chronic-care drugs and utilities are defensive.
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