24 May 2015 17:50 IST

A year after Modi regime, stocks swing both ways

While auto, defence and renewable energy stocks perked up, those in the banking, power and infra sectors took a hit

In the last one year, the benchmark index Sensex moved up 13 per cent and the Nifty gained 15 per cent, this despite the recent bout of volatility. Which are the stocks that spurred the market in this period?

With the change of government at the Centre raising expectations of policy reforms and a pick-up in economic growth, stocks from sectors such as real estate, cement, auto, and consumer/capital goods emerged multi-baggers in this period.

But the market was also cautious, with several stocks that did not meet investor expectations taking a battering.

Stocks in the limelight

Among the top 500 stocks by market capitalisation, Hitachi Home, maker of air-conditioners, emerged the top performer, gaining 574 per cent in the last one year. Other domestic appliance makers that made it to the toppers list include Whirpool and Symphony, which gained more than 100 per cent. Continued demand for white goods seems to have given a leg-up to these stocks.

A turnaround in auto sales in 2014-15 from the cyclical downturn witnessed in the previous two years, sent many auto stocks soaring. Bharat Forge, Eicher Motors, Wabco India, Ashok Leyland, Amara Raja Batteries and Sundram Fasteners have all more than doubled since May 26, 2014.

Policy measures also favoured quite a few stocks. The thrust on defence indigenisation and the ‘Make-in-India’ campaign saw the price of Bharat Electronics double in the last one year. Government-run property developer NBCC (up 180 per cent) and Cera Sanitaryware (up 86 per cent) benefited from the emphasis on affordable housing and the Swachh Bharat Mission.

The focus on renewable energy also saw the stock of Solar Industries, maker of solar power equipment parts, soar by 123 per cent. Besides, stocks with the ‘Gujarat’ tag such as Gujarat Gas (up 113 per cent) and Gujarat Pipavav Port (87 per cent) continued to be favoured by investors as well.

What is interesting is that all these stocks gained in the run-up to the elections too — in the rally from the marker lows of August 2013 until May 2014.

Shedding some flab

On the other hand, many stocks that stole the show prior to the elections, lost out in the last one year. Prominent among them are stocks from the banking, power and infrastructure space.

A slower-than-expected pick up in economic growth, lacklustre loan off-take and ballooning non-performing assets saw stocks of almost all public sector banks lose steam. Punjab National Bank, UCO Bank, J&K Bank, United Bank, Bank of India and Indian Overseas Bank lost between 25 and 45 per cent.

With power sector reforms yet to make a meaningful impact and company-specific issues also weighing on some players, stocks of Lanco Infratech, JP Power Ventures GVK Power Infra, Power Finance Corporation, PTC India, BHEL were among the major losers in the last one year.

Also, the crashing of commodity prices and the continued regulatory overhang on mining meant a bad year for stocks such as NMDC, JSW Steel and SAIL as well.

Cautious sentiments

The cautious sentiments of the market are reflected well in the performance of the sectoral indices. After the 40-50 per cent gains from August 2013 to May 2014, the BSE Metals, Oil & Gas, Power and Realty indices lost 10-20 per cent in the last one year.

Defensive sectors such as FMCG and pharma were favoured yet again. The BSE Healthcare index jumped 70 per cent in the last one year against a mere 10 per cent gain in the August 2013-May 2014 period. The BSE FMCG index rose 17 per cent in 2014-15.





Recommended for you