The Hindu Business Line : Capital goods index jumps 3-fold when Sensex doubles

Capital goods stocks have cashed in on the recent Indian bull run, outperforming all other sectors, including the benchmark index, by a handsome margin.

While the Dalal Street bellwether Sensex has moved up from 10k to 20k during the period between June 16, 2006 and today, the BSE Capital Goods Index has gone up by 200 per cent in the same period.

In the last three months, the BSE Capital Goods Index has improved by 55.68 per cent against the Sensex gain of 31.13 per cent and Nifty gain of 32.86 per cent.

In the past one month, the outperformance of the BSE Capital Goods Index’s is more etched out at 35.20 per cent against Sensex’s upward movement of 15.53 per cent and Nifty’s 17.6 per cent.

In the last five sessions, the capital goods average has gone up by 27.48 per cent against Nifty’s 13.92 per cent and Sensex’s gain of 13.41 pe rcent.

Greater participation

According to analysts, country’s infrastructure sector has of late been seeing greater participation by the private corporations along with the PSUs. “Going forward, we would require more and more big time investments and capacity building in the infrastructure sector,” said Mr Ashith N, Kampani Managing Director of JM Financial.

According to Mr Gul Teckchandani, an independent strategist, the growth potential in the sector is infinite. “The stocks in this sector, spread across the different market cap zones are going to be the growth engines for the equities market for the next few years.”

Oil and gas sector has also been hyper active. Among the BSE sectoral indices, its outperformance of Sensex was second to the capital goods segment. The BSE Oil and Gas index gained 146 per cent in the timeframe when the benchmark moved by 100 per cent. Bankex, Metal, BSE 500 (representing primarily the mid–cap stocks), and PSU indices also raced ahead of the Sensex in the period between June 16 and today.

Construction and small and mid-cap indices closely followed the bellwether. The laggards were the FMCG, Auto, Healthcare and IT sector indices of the BSE.

Mid-cap show

The mid-cap and small-cap stocks also outperformed the benchmarks in the past five days. In the past three months, these groups raced neck and neck, but witnessed a period of sluggishness in the past one month period.

According to Mr Ajay Jaiswal of Angel Broking, the mid and small counters largely shadowed the performance of the benchmark indices since the middle of last year. “But currently they are showing clear signs of a take off ”, he added.

He mentioned that while the BSE 500 gained 14.39 per cent in the last five days, in the same period Nifty Midcap 50 moved up by 14.44 per cent, representing a trend of outpacing the Nifty and the Sensex.

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