Mumbai: As the Indian equity market witnesses a record run amid the Covid-19 pandemic, an anatomy of the market movement shows the rise in equities have been on a rotational basis.
Bluntly, sectors such as banking, metal, telecom, cement, infra, FMCG, automobile and realty have attracted massive buying bursts from time to time.
As of now, it is the financial, banking and metal stocks that are ruling the roost as top performing sectors.
Since October 14 till date, public sector banks have surged 43 per cent, while metal stocks have grown 33 per cent.
Data furnished by ICICI Securities showed that banking and CPSE stocks rose 27 per cent while telecom stocks have increased 22 per cent.
Mid-caps and small-caps have grown 21 per cent and 16 per cent respectively.
The report suggested that there are four distinct phases, where high level of sector and style rotation has been observed.
In the first phase, from March 23 to April 30, pharmaceutical shares surged the most by 45 per cent, followed by energy stocks with 34 per cent growth, led by Reliance Industries (RIL).
The second phase spanned from April 30 to August 28, with small caps, media auto and IT as the top most sectors. IT stocks led the third phase from August 28 to October 14.
Subsequently, the fourth phase commenced on October 14 and is ongoing till date. In this phase, public sector banks and metal stocks have grown tremendous growth.
Apart from the report, industry insiders said that cement, infra and automobile companies have also give healthy returns during this period.
Now with the year-end period, an acceleration can be witnessed in pharma stocks, they said.
The sector has given hefty returns throughout this period. This has come on the back of high sales during the pandemic along with hopes regarding a vaccine to combat novel coronavirus.
Furthermore, citing high demand due to expected upswing, some brokers claimed that pharma stocks are now being offered in packages that come in specific SIP bands for short duration and give exposure to a mix set of large to mid cap stocks belonging to the sector.
As per analysts, normalisation of economic activity continues, but second wave of Covid poses near-term challenges even with hopes of vaccine turning into reality.
Another report by Kotak Institutional Equities showed that the ‘rotation’ in the Indian market since its mid-March lows is quite logical.
Various sectors have performed at different times, linked to the market’s shifting views about the extent of Covid-related damage to earnings and economy with large-scale damage in March-May. Pharmaceuticals sector did best in this period followed by consumer staples.
During June-August, there was medium-scale damage and hopes of economic recovery. During October-November, limited damage and conviction was witnessed about recovery. Financials, industrials and metals performed strongly, it added.