Despite periodic bouts of volatility, the benchmark indices Sensex and Nifty rallied 15 percent and 13 percent, respectively in 2019. The market rally was largely supported by inflows from foreign institutional investors (FII), coaxed by policy easing by the government. In the last three months alone, FIIs invested around $3 billion.
However, the market run was far from widespread because only a few companies have been driving up sentiment. Sample: FIIs limited their appetite for investment to largecaps and quality companies.
Decisions by authorities targetted a particular sector — examples include the announcement of a scrappage policy for automobiles, boosters to revive NBFCs and tackling the bad loan troubles of public sector banks, among others, also guided the indices during the year.
Only three sectors managed to outperform benchmarks during the year while six sectors generated negative returns. The rally was mainly led by gains in realty, financials, and IT space. However, media, metal, and auto indices slacked.
On the outlook for the coming year, most brokerages are 'overweight' on financials, healthcare, and industrials, and 'underweight' on consumer staples, IT, and auto space.
Morgan Stanley in a report said it continues to support momentum in the market at a reasonable price. It said it believes the way to construct portfolios is to buy stocks of companies with the highest delta in return on capital.
Experts mostly are bullish about the market as they expect the domestic economy to gain strength in the coming quarters and nagging global factors, such as the US-China trade war, to ease further. The government is also expected to announce steps in Budget 2020, which will help the economy, step up demand by consumers through a possible cut in income taxes, and bring cheer to the market.
Here are the top-performing sectors of 2019: Nifty Realty
The past year has been a rollercoaster for the Indian real estate sector. Nonetheless, Nifty Realty rose 27 percent . Seven of the 10 constituents in the index gave positive returns while only three were in red in 2019.
sector witnessed the impact of the ongoing NBFC crisis resulting in liquidity squeeze and the slow pace of recovery in sales. On the other hand, the successful launch of India’s first Real Estate Investment Trust (REIT) opened new avenues for investments while multiple government sops provided relief to the housing sector.
Prestige Estate was the top gainer, rising 52 percent, followed by Phoenix Mills, Brigade Enterprises, and Godrej Properties, which rose over 45 percent each .
DLF was up 30 percent, Sunteck Realty added 19 percent and Oberoi Realty advanced 17 percent in 2019. In the list of losers, Indiabulls Real Estate fell 31 percent, Sobha shed 11 percent, and Mahindra Lifespace was down 1 percent.
Nifty Fin Services
The index was another top performer in the year, rising 27 percent despite a long list of troubles such as a crushing liquidity crunch, defaults, bankruptcy, shrinking balance sheets. Among 20 constituents in the index, 15 gave positive returns, while only five were in the red.
The year was dismal for non-banking finance companies that continued to reel under the fallout of the IL&FS-triggered crisis. “While their outperformance was partly due to their brilliant franchises, it was also helped by the relatively low competitive intensity from their peers, which led to market share accretion for them,” ICICI Securities said in a report.
HDFC Standard Life, Bajaj Finance, and ICICI Lombard gained more than 60 percent while ICICI Prudential, Bajaj Finserv, HDFC, and Cholamandalam Investments rose 20-50 percent. However, Indiabulls Housing fell 64 percent and Indiabulls Ventures was down 47 percent. Edelweiss Financial Services lost 37 percent, M&M Financial declined 31 percent, and Shriram Transport Finance slipped 6 percent in 2019.
The index made a 20 percent upswing in 2019, with six constituents in the red and six in the green. While it was a bumper year for major private sector lenders, it was the polar opposite for public sector lenders. Most analysts expect banks to continue to perform well in 2020.
ICICI Bank rose the most, up 51 percent for the year while Kotak Bank advanced 34 percent. Axis Bank and HDFC Bank added over 20 percent and SBI was up 12 percent in 2019. IDFC Bank jumped 4 percent in this period. Among losers, Yes Bank was the worst performer, down 73 percent followed by RBL Bank, which was down 41 percent. Punjab National Bank, Bank of Baroda, Federal Bank and IndusInd Bank fell 4-18 percent in 2019.
The Nifty Energy index rose more than 11 percent in 2019 despite seven of the 10 stocks in the index delivering negative returns. The rise was sustained by gains in only three stocks — Reliance Industries (RIL), BPCL, and HPCL.
oil stocks from the index rose, power stocks have been under pressure for most of the year due to negative newsflow such as of PPA renegotiations, demand reduction and mounting dues from discoms to the generating companies.
While RIL and BPCL surged over 35 percent in 2019, HPCL added 5 percent on a year-to-date basis. Losers included Reliance Infra (down 91 percent), GAIL (down 34 percent), Tata Power (down 27 percent), ONGC (down 15 percent), IOC (down 8 percent), NTPC (down 5 percent), and PowerGrid (down 4 percent).
Nifty IT ended up as one of the best performing sectors in 2019 despite wage hikes, high attrition, visa costs, and a strong rupee. The sector hasn't reported strong earnings during the year and the brokerages expect it to remain muted in the near future.
Nifty IT has risen 9 percent in 2019 with over half its constituents in green.
Among Nifty IT stocks, NIIT Tech surged the most, up 38 percent in 2019. Meanwhile, TCS and HCL Tech have rallied 18 percent each this year. Just Dial has advanced 15 percent, Infosys has risen 11 percent, Tech Mahindra is up 8 percent. Among losers, Tata Elxsi has is down 19 percent, MindTree has fallen 7 percent and Wipro has slipped 0.2 percent during this time.
Analysts remain cautiously optimistic for the sector with a long-term view as the sector may witness some headwinds in the near future.
Here are the worst-performing sectors of 2019: Nifty Media
Nifty Media was the worst-performing sector of 2019, down 28 percent for the year with only two stocks in the green. Inox Leisure surged 56 percent for the year while PVR added 18 percent.
Among losers, Eros Media ceded the most, down 84 percent, followed by Dish TV and HT Media, which fell around 65 percent. TV18 Broadcast, Jagran Prakashan, Network 18 Media, Hathway Cable, Zee Entertainment, Den Networks, TV Today Network, Sun TV Network, and DB Corp lost 20-45 percent.
Nifty PSU Banks
Most public sector banks were major wealth destroyers in 2019 as they have been under pressure, despite recapitalisation and rate cuts, on asset quality issues, increase in bad loans, and low visibility of profit in the near future.
On a year-to-date basis, the
Nifty PSU bank index fell 17 percent compared with a 13 percent rise in the benchmark Nifty.
Allahabad Bank, Indian Bank, Central Bank of India, Oriental Bank, Union Bank of India and Bank of India declined 30-60 percent in 2019. Other losers include Syndicate Bank, J&K Bank, Punjab National Bank, Canara Bank and Bank of Baroda, which have declined 13-30 percent.
However, State Bank of India (SBI) has been an exception, gaining around 13 percent in 2019.
The Nifty Metal index has also been among the worst performers in 2019, down nearly 13 percent. Metal stocks have been under pressure and have underperformed benchmark indices on the back of weak quarterly earnings, growing worries about demand slowdown and correction in commodity prices.
Among stocks, only 2 stocks were positive for the year - APL Apollo Tubes, up 54 percent and NMDC, up 31 percent.
NALCO topped the list of losers, down 34 percent while Jindal Stainless, Hind Copper, Vedanta, Hindustan Zinc, and SAIL declined over 24 percent each. MOIL, Coal India, JSW Steel, and Tata Steel, down between 10- 16 percent.
The year was terrible for automobile stocks as the sector has struggled with a sharp slump in sales, decreasing production due to a fall in consumer demand and liquidity crunch.
On a year-to-date basis, Nifty Auto lost over 10 percent with only two stocks in the green. While Bajaj Auto rose 19 percent for the year, Tata Motors added 4 percent.
Among losers, M&M, Exide Industries, and Apollo Tyres lost 30-33 percent, while Bosch, Hero MotoCorp, and Ashok Leyland lost over 20 percent each.
TVS Motor Company and Motherson Sumi fell 17 percent and 10 percent, respectively, and Eicher Motors, Bharat Forge, and Amara Raja were down around 3 percent each.
Nifty Pharma index dragged the NSE,
falling about 9 percent on the back of USFDA observations, pricing pressure, increasing R&D expenses, and fixed-dose combinations (FDC) ban, among others.
The fall in the sectoral index was led by Glenmark Pharma, which declined 50 percent for the year. Aurobindo Pharma and Piramal Enterprises followed the trend, losing 33 percent and 36 percent, respectively, for the year while Cadila Healthcare was down 27 percent. Biocon, Cipla, and Lupin also gave negative returns, down between 6-9 percent.
Only three stocks from the sector gave positive returns: Divi's Labs (up 25 percent), Dr. Reddy's (up 11 percent), and Sun Pharma (up 0.2 percent).
According to analysts, generic manufacturers suffered from pricing pressure, regulatory challenges, entry of new players, currency fluctuations and lower purchasing power.
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