Missed opportunity? These 4 sectors have added spark to investors’ portfolios since last Diwali
The power sector coupled with capital goods, fast-moving consumer goods (FMCG) and automobiles managed to add a spark to investors’ portfolio despite a tepid year for the domestic equity market since last Diwali.
The benchmark BSE Sensex declined 1.43 per cent to 59,202 on October 20, 2022, from 60,067.62 on November 4 last year.
Leaders
With a rally of 38 per cent, the BSE Power index emerged as the top sectoral gainer on the exchange. It was followed by BSE Capital Goods (up 14 per cent), BSE FMCG (up 14 per cent) and BSE Auto (up 13 per cent).
According to HDFC Securities, the rise of power, auto and capital goods stocks in Samvat 2078 reflects a return of cyclical to the fore. “FMCG also did well as a defensive option, even as ITC got rerated and contributed significantly to the sector returns,” the brokerage said.
Top Gainers
Among the top sectors, shares of Adani Power have rallied the most 221 per cent since last Diwali. The Ugar Sugar Works (up 170 per cent), Shree Renuka Sugars (up 127 per cent), Elgi Equipments (up 125 per cent), Vadilal Industries (up 125 per cent), Schaeffler India (up 86 per cent) and Hindustan Aeronautics (up 83 per cent) stood among other major performers.
Laggards
On the other hand, the BSE Realty index (down 22 per cent), IT (down 17 per cent), Metal (down 9 per cent) and Healthcare (down 7 per cent) were among the main underperformers on the BSE.
IT remained under pressure due to lower visibility into revenue growth due to recession fears in the developed economies and higher wage cost pressures. Metal stocks declined as metal prices fell faster than the cost of raw materials and fuel/power.
Commenting on the IT sector, Narendra Solanki, Head- Equity Research, Anand Rathi Shares & Stock Brokers said, “At present, there are concerns regarding the sustainability of future demand outlook due to challenges in the US and Europe as well as high employee attrition putting pressure on margins. However, IT as an industry remains resilient in long term – rewarding its shareholders with high dividends and large buyback.”
Sectors to bet on
For sector-specific investors, Deepak Shenoy, Founder, Capitalmind said, “In general, the performance of sectors is not predictable in the year ahead, but we think specifically large banks, large-cap IT, manufacturing, defence and retail stocks should do well.”
On the other hand, Pawan Parakh, Fund Manager, Renaissance Investment Manager, and small case manager added that sectors related to the core domestic economy should do well. In addition, capex cycle recovery and manufacturing are key themes to play out over the next 3-5 years. Hence, we are positive on sectors like banks, auto, industrial and chemicals sectors, among others.
