Metals emerge as 2026’s top sectoral bet, IT, FMCG struggle
The metals sector has achieved a double-digit return this year, outperforming other indices. Realty stocks have seen a significant turnaround, gaining nearly four percent after last year's decline. Telecom, Capital Goods, and Healthcare also emerg...
ET Intelligence Group: Among sector indices, metals has emerged as the only index to earn a double-digit return in the first eight months of 2026 after staying in the green in the comparable period of the last year. It has clocked 17% return this year so far on the back of a 7% gain in the corresponding period of the previous year. The sector has benefited from a recovery in ferrous and non-ferrous metal prices. Realty stocks have staged a sharp turnaround this year, gaining nearly 4% after falling 17% in the first eight months of the past year.
Telecom, Capital Goods and Healthcare have emerged as the strongest performers this year, with each index rising nearly 18%. These indices had lost 2.5%, 3.7% and 3.5% last year in the first eight months. IT and FMCG have been the major laggards in 2026 so far, falling 18% and 13%, respectively.
Metal stocks have outperformed on the back of a favourable pricing environment and improving earnings outlook. Domestic steel prices recovered sharply after the government's safeguard duty, while robust construction and infrastructure demand supported volumes and realisations. Non-ferrous metal producers have also benefited from a sharp rise in global aluminium, zinc and copper prices due to supply disruptions and geopolitical tensions. Demand from infrastructure, electrification, renewables and automobiles augurs well for the sector. Among metal stocks, Steel Authority of India leads the pack with a 34% gain year-to-date.
Realty stocks have benefited from resilient housing demand, healthy developer balance sheets and expectations of a recovery in project launches. Strong pre-sales and collections have improved developers' cash flows and reduced balance-sheet concerns, while a robust launch pipeline is expected to support bookings.
IT and FMCG stocks have underperformed amid concerns over earnings growth and margins. IT companies have faced weak discretionary technology spending, geopolitical uncertainty and growing concerns that generative AI could disrupt traditional services and create pricing pressure. FMCG stocks have been under pressure this year as investors worry about slowing consumption growth and rising raw material costs which put pressure on gross margins.
