What is the meaning of monopoly? Have you ever wondered? When a company controls a significant portion of a market, it is said to have a monopoly. The legal threshold for classifying a company as a monopoly is set by each jurisdiction’s legislation. Simply put, it is a market condition in which a company holds a dominant position in a certain industry. Monopolists can be created in a variety of ways, including through the use of scarce resources, intellectual property, exclusive rights, government-granted monopolies, and the merger of two significant players.
You could also choose to invest in these monopolies by buying their stocks, and as we go on, you can see some well-performing monopoly stocks in the Indian stock market.
Here we are going to have a discussion about monopolies in the Indian stock market.
What is the Meaning of Monopoly?
A monopoly is a business with “monopoly power” in a market for a certain item or service. This means it wields so much market power that competing businesses find it nearly impossible to enter the market. A monopoly’s existence is determined by the nature of its business.
Vertical integration allows some businesses to become monopolies, controlling the whole supply chain from production to retail. Others employ horizontal integration, in which they acquire competitors until they are the only ones left.
Once competitors have been eliminated and a monopoly has been created, the monopoly can raise prices to whatever level it desires. If a new competitor seeks to enter the market, the monopoly can lower prices as much as necessary to drive them out. Once competitors have been pushed out, any losses can be recouped through higher prices.
You could mostly find at any stock broker in India the list of monopoly stocks, but here is a gist of it so you can have a good look.
List of Monopoly Stocks in the Indian Stock Market
- IRCTC: India’s Mini Ratna is the Indian Railway Catering and Tourism Corporation Ltd. It provides services such as ticketing, packaged water bottle sales, and catering to Indian Railways. IRCTC is the sole corporation operating in this area, making it a real monopoly in the railway industry.
- Coal India: Coal India is India’s largest coal mining and processing corporation. Coal Mines Authority Ltd was established in 1973. It is now owned by the Union government and operated by the coal ministry. It also has the title of being the world’s largest coal producer. In the coal production industry, the corporation has an 82% market share. The company’s main customers are companies in the power and steel industries.
- IEX: The earliest and largest electricity exchange in India is the Indian Energy Exchange (IEX). It is an online marketplace where energy dealers can trade. You can also trade in the electricity market, green energy, and renewable energy certificates, among other things.
- HAL: Hindustan Aeronautics manufactures aircraft and helicopters, as well as repairs and maintenance of these aircraft and helicopters.
- MCX: India’s first commodities derivatives exchange is the Multi Commodity Exchange (MCX). You could also trade a wide range of commodities derivatives on this exchange. In India’s commodity exchange business, MCX has a market share of roughly 92%. It has a complete monopoly on precious metals, energy, and base metals trading.
- Pidilite Industries: Pidilite Industries Limited is an Indian company that produces adhesives and sealants, building chemicals, craftsman products, DIY products, and polymer emulsions. The majority of the items were developed with significant in-house R&D. Fevicol, our brand name has become synonymous with adhesives in India, and it is one of the most trusted brands in the country.
- Hindustan Zinc: Hindustan Aeronautics Ltd. is another major monopoly stock in India’s defense industry. Mr. Walchand Hirachand founded the company in Mysore in 1940. It is currently a state-owned enterprise. The Indian military designs and manufactures fighter jets, helicopters, jet engines, marine gas turbine engines, and much more.
- CAMS: The business operates like a mutual fund transfer agency. It offers services to investors, distributors, and asset management firms (AMCs).
- ITC: ITC is the country’s largest cigarette manufacturer and seller, having been founded in 1910. At the moment, ITC is involved in five business segments: FMCG Cigarettes, FMCG Others, Hotels, Paperboards, Paper and Packaging, and Agri-Business. Cigarettes are an example of fast-moving consumer goods (FMCG) (45 percent of revenue). With a market share of more than 80% in the organized domestic cigarette market, ITC is the market leader. Insignia, India Kings, Classic, Gold Flake, American Club, and other brands are among the many available.
- Marico: Marico Limited is a significant consumer goods company in India, specializing in worldwide beauty and health. It operates in 25 countries, on the whole, in Asia and Africa’s growing markets. It supports leading brands in hair care, skin care, edible oils, healthy foods, male grooming, and fabric care, among other categories.
A monopoly is sometimes essential. Some industries, such as utilities, benefit from government rules that provide them with a market. This is done by governments to protect consumers. Because there are no disruptions from free-market forces such as rivals, a monopoly provides steady electricity production and distribution and also a constant source of income to its investors.
There are a lot of critical acclamations towards monopolies by experts, but on the whole, monopoly stocks are always known to make some good returns for their buyers. So, investing in them could be a good idea, and there are very few chances that these stocks would ever drop in price.