Sector themes

In general, the bounce-back has been strong and across-the-board. Sectors such as textiles, engineering, construction, hotels and automobiles lost value in the October sell-off, but they made a robust comeback in the rally. Some of sectors that surged in the latest rally, after being on the sidelines were:

Banking: Not only were the banking sector stocks relatively subdued in the August to early-October rally, some of these stocks fell more sharply than the broad market during the bearish spell in October.

In the latest rally, however, quite a few stocks have participated and recovered some lost ground. High profile private banks such as HDFC Bank, ICICI Bank and Kotak Mahindra Bank were clearly ahead in gains in the latest leg of the rally compared to their peers.

Refineries: Refinery sector stocks that had been languishing for a while have also made a strong comeback. Integrated players such as Bharat Petroleum, Hindustan Petroleum and Indian Oil stand to gain on account of the prospect of higher marketing margins due to weakening crude prices.

As Indian Oil is also in the process of unlocking its cross-holdings with ONGC, some value buying has also been seen in these stocks.

For standalone refiners such as Kochi Refineries, IBP and Bongaigaon Refinery, the prospects of sharing a lower subsidy burden with falling crude prices and a call on the merger with integrated refiners appears to have attracted heightened trading attention.

Information Technology: The visible change in buying interest has been in the software sector. Both frontline and mid-cap stocks were shunned in the first half of the calendar year on account of weak earnings, lowering of earnings guidance and growth issues. But the second quarter marked a turning point for the frontline stocks in the sector.

A good performance in the second quarter, strong off-shoring momentum, robust client and manpower addition and depreciation in the rupee have worked in favour of the frontline players. Activity in the mid-cap space has been dictated, to some extent, by prospects of consolidation.

The sectors that turned in a mixed performance were cement, paper, auto ancillaries, steel and pharmaceuticals.

Winners and losers

Some of the stocks that have settled at a price higher than the top of the previous rally in October are Nelco, Titan Industries, Aptech, Nova Petrochemicals, Aksh Optifibre, Reliance Capital, KCP and National Aluminium.

Nelco, a Tata group company that offers VSAT solutions and engineering services for a range of industries such as power and container freight, has been one of the stars in the recent rally.

Driven by robust project revenues, the latest July-September quarter has been exceptionally good for the company. After three quarters of net losses, the company has moved into the black.

The firming up of gold prices in the festival season, perception of being a retail branded play and strong second quarter performance appears to have driven Titan Industries to bounce back sharply from the lows of Rs 395 it touched in late October. It has touched a 52-week high on November 18. The post-tax earnings have doubled from the previous year on a 30 per cent rise in revenues.

The new management, led by Mr Rakesh Jhunjhulwala, a well-known equity investor, good second quarter performance and turnaround in the software education and training business have attracted heightened trading activity in the Aptech stock. The proposed increase in the FII limit from 24 per cent to 74 per cent will also retain investor interest in the stock.

In marked contrast, relatively subdued quarterly earnings performance by Hindustan Construction, Nava Bharat Ferro Alloys, Praj Industries, Alfa Laval, CMC and Ingersoll Rand have made them the losers in this rally.

In most of these cases, after shedding value in the decline in October, the stocks have slipped further in the latest rally.

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