NEW DELHI: The euphoria in the stock market, more precisely in the largecaps, seems to be over. In the first eight months of the ongoing calendar, domestic stock indices leapt higher only to fall back where they had begun, with a mere 1-3 per cent returns.
Analysts say earnings have not rebounded the way they had expected, and global factors are signalling a sharp slowdown, and possibly a recession ahead.
The only silver lining has been the strong flows to mutual fund, which has to an extent managed to counter the FII outflows. At a time when interest on savings and fixed income products are falling, equity looks attractive, say analysts. Investors need to be patient and make most of the ongoing weakness by buying into select sectors on dips, they say.
Here is how the market fared in 2019 so far:
Sensex, Nifty take U-turn The BSE benchmark Sensex climbed 4,244 points, or 11.76 per cent, to hit a record high 40,312 on June 4, but reversed from there to give up most of the gains. The index is now up 1,264 points, or 3.51 per cent, year-to-date to trade at 37,332. A 4.86 per cent correction in July due to a slew of market-unfriendly announcements in the Budget weighed heavy on investor sentiment and affected stock returns.
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Nifty is up 1.58 per cent for the year so far. “While the market may fall some more, investors may avoid bottom fishing in sectors like telecom, metals, power and infrastructure. They could go for staggered buying over the next six months in auto, cement, insurance, capital goods, largecap IT and private banks,” HDFC Securities said in a note.
As FPI selling intensifies, DII buying emerges FPIs, who infused close to Rs 83,000 crore into domestic equities during February-June, have pulled out Rs 30,000 crore during the July-August period.
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“What you have to realise is that a part of the FPI inflows through February-May was event-driven trade. FPIs were trading Modi victory. July gave them a logical reason to do so. I would say $1-2 billion should come back over the next two to three months,” Saurabh Mukherjea of Marcellus Investment, told ETNOW. Domestic institutional investors, which were net sellers ahead of general elections have invested heavily into stocks in the past few months. They have poured Rs 33,719 crore into domestic equities in 2019 so far thus year. They were net buyers of Rs 41,000-odd crore worth of equities in July and August alone. Metals, auto stocks in bear grip
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Among sectoral indices, metal and auto indices have fared poorly, falling 28 per cent and 24 per cent, respectively. A fall of over 20 per cent from a recent high is considered a bear market. Capital goods, healthcare and FMCG stocks have also fared badly this year so far.
Meanwhile, a falling rupee has helped the BSE IT index top the sectoral chart. Falling interest rates have lifted the BSE Realty index 13.89 per cent, while the BSE Consumer Durables index has climbed 13 per cent. Financial stocks lead gainers Four out of five top performers on BSE500 this year have been financial stocks. Aavas Financiers, Reliance Nippon Life Asset Management, HDFC Asset Management Company and CreditAccess Grameen have climbed 46-75 per cent so far this calendar. SpiceJet has gained 48.87 per cent during this period. Among top 10, five are from finance sector, two from insurance and two from aviation sectors.
Meanwhile, ADAG stocks have been the worst performers on the BSE500 index.
