INSUBCONTINENT EXCLUSIVE:
Domestic software exporters and banking stocks have outpaced equity benchmark Sensex in terms of returns so far this financial year 2018-19
While the BSE IT index and Bankex have advanced 25 per cent and 23 per cent, respectively, the 30-pack Sensex is up 16.36 per cent for FY19
Analysts say a falling rupee, share buybacks and dividends made IT stocks more attractive in an otherwise volatile market
Bank shares gained on the back of government capital infusion in PSU players and some major IBC resolutions, which helped ease the bad loan
The Nifty Bank index crossed the 30,000 mark for the time in morning trade on Friday.
However, if one were go by analyst projections, the IT
counter is projected to slow down from here on, while banking may continue to deliver good returns and real estate stocks may see a rebound
“IT may underperform in FY20, especially post elections, as the rupee might show strength and volatility may reduce
However, public sector banks and real estate can beat the broader market
Easing norms will help realty and better liquidity will come to the aid of banks,” said Sameer Kalra, Equity Research Analyst and Founder,
Target Investing.
On the banking front, asset quality continued to improve on a sequential basis and total gross non-performing assets
(GNPA) of the system declined 3.6 per cent QoQ in Q3FY19
The industry’s GNPA ratio came in at 10.3 per cent in December quarter against 11.4 per cent in the previous quarter.
The domestic equity
market remained choppy last year amid inflated valuation, global trade worries, geopolitical tensions between India and Pakistan, Sebi
re-categorisation of mutual funds, corporate governance issues in several companies and liquidity crisis for NBFC.
But the market is looking
up fast over the past few weeks amid improving macros, benign global cues and prospects of the Modi government returning to power in the
Foreign brokerages Morgan Stanley and Goldman Sachs have gone over-weight on Indian market
Goldman Sachs recently upgraded its investment view on Indian equities to ‘overweight’ from ‘market-weight’ and set a one-year
target for Nifty at 12,500, a potential gain of over 8 per cent
The index hovered around the 11,500 mark on Friday
Morgan Stanley has projected Sensex to top the 42,000 mark by December-end.
Intense competition and profitability pressure continued to
depress the telecom sector in FY19
The BSE telecom index underperformed for the fifth straight year in a row, falling nearly 21 per cent to emerge top loser in BSE sectoral
Choice Broking anticipates modest margin expansion for the sector a sequential basis with early signs Arpu expansion and the incumbents
focussing on return on capital.
“With further pricing stability, we are expecting relatively better profitability in the years ahead
Operators with a higher share of 4G subscribers are likely to gain more from the revival in industry profitability,” it said in a report
The brokerage has a neutral view on Airtel and is negative on Vodafone Idea.
Auto (down 20 per cent), Metals (down 15.18 per cent), Realty
(down 10 per cent), Power (down 5 per cent) and Capital Goods (down 1.80 per cent) indices are on course to end the financial year among the
sector losers in terms of returns
Centrum Broking sees no respite for the auto counter in the near term
Considering the current subdued sentiment, vehicle demand will continue to remain volatile, it said
“Given the government’s strong focus on the rural economy as highlighted in the recent Budget, two-wheeler volumes should gain momentum
in the medium term,” the brokerage said.
The BSE Teck, FMCG and Healthcare and Oil Gas indices gained between 5 per cent and 16.48 per
In Q3, most FMCG majors reported double-digit volume growth, largely aided by buoyancy in rural demand.
Investors can focus on the
“Various government subsidies and schemes targeted at enhancing rural income levels are finally reaping the rewards as consumption demand
is witnessing a pickup,” the brokerage said.
Gaurav Dua, head of research at Sharekhan said auto and metal sectors continued to present a
bleak outlook and may remain a drag on the index
However, a few stocks from the corporate banking and industrial segments could emerge new leaders going forward.
