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With uncertainty and volatility ruling the markets for most of this year, defensive bets such as FMCG, pharma and banking and financial services (BFSI), particularly private banks, witnessed an upswing in investors attention in 2012.
The BSE FMCG index rose 46 per cent from 4,054 to 5,916 year-to-date. The total turnover of index more than tripled to Rs 31,114 crore year-to-date, better than any other sectoral index on the BSE.
“FMCG was the sector which saw the largest move up followed by pharma and BFSI. This trend is reflected in the increase in institutional holdings in these sectors,” said Rikesh Parikh, Vice-President, Market Strategy and Product Development — Equities, Motilal Oswal Financial Services.
Trend to continue
“BFSI has also given a better return and it will continue to do so. PSU banks also did better this year though the issue of non-performing assets continues to haunt and is reflected in their valuations vis-à-vis their peer group. As long as the economy grows, this sector especially private banks, would see their margins appreciating,” added B. Gopkumar, Head of Broking, Kotak Securities.
However, going forward, New Year 2013 could see laggard sectors such as auto, metals and infrastructure play catch-up and rate sensitive sectors such as BFSI could be the possible crown stealer from FMCG for the top slot, according to several market experts.
“Once we see Nifty reach the psychological mark of 6,000, acceptance for stock investments would increase and rate sensitive sectors such as infrastructure, auto, real estate and PSU banks could come into the limelight. This seems a possibility given the way Government has acted on the reforms front and the way RBI has indicated at the possibility of a rate cut in January,” said Parikh.
Scope for Rural sector
Moreover, given the election year in 2014, populist overtures by Government towards the rural economy could work in favour of companies connected to rural consumption which could do well next year, according to Gopkumar.
“The opportunity through the Government’s Aadhaar scheme, wherein subsidies would be transferred by cash directly into the beneficiary’s bank account could improve rural consumption and be a game changer for the economy. Asset light infrastructure companies could also get good traction if the economy revives and the contrarian bets prove to turn out good,” he added.
However, experts caveat their sectoral trend projections with a cautious view.
“Private sector banking, select auto stocks in the two, four-wheeler category, select commodities such as cement and steel along with real estate and infrastructure should rule in 2013. But it would all depend on if the Government pushes through its reforms initiative to reach the implementation stage,” said Mr Gaurang Shah, Assistant Vice-President, Geojit BNP Paribas.
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