Breaking Down the Sectors

In this post, we will break down the performance of all the major sectors. We will look at the returns of each sector for the past year, 6 months, and 1 month. By doing so, we can see which sectors are trending upwards and which ones are not.

Performance of the Major Sectors
Breaking Down the Performance of the Major Sectors

20 years ago, this exercise might have been difficult to do since there was no standardized way to track different sectors. Luckily for us, the BSE has an index that tracks each sector. Let’s look at how each of these indices have performed.

Sector1 Month Return6 Month Return1 Year Return
Auto2.51%4.1%26.2%
Banking10.3%7.1%45.2%
Capital Goods6.7%1.8%28.6%
Consumer Durables13.8%13.3%19.4%
FMCG3.1%1.1%22.2%
Healthcare4.5%-4%0.09%
IT4.9%-0.4%-2.7%
Metal4%17.9%72%
Oil and Gas6.2%24.2%57.5%
Power6.1%6.9%35.1%
PSU5.4%15.2%49.3%
Realty7.9%-7.2%35.3%
Technology1.5%0.5%0.2%

Takeaways

1. All the sectors have returned positive returns over the past 1 month! This is a very encouraging sign, since it shows that the macro economy on a whole is trending upward (versus just individual sectors).
2. Metal and Oil & Gas are the only two sectors that performed better than 50% over the past year. These 2 sectors performed extremely well, and the good news is that it has been a long, sustained move upwards.

Here is the 1 year chart for Metal.

BSE Metal Index 1 Year Returns
BSE Metal Index

And here’s the 1 year chart for Oil & Gas.

BSE Oil and Gas Index 1 Year Returns
BSE Oil and Gas Index

The Metal Index is comprised of these 10 stocks:

Coal India Ltd
Hindalco Industries Ltd
Hindustan Zinc Ltd
Jindal Steel & Power Ltd
JSW Steel Ltd
National Aluminium Co Ltd
NMDC Ltd
Steel Authority of India Ltd
Tata Steel Ltd
Vedanta Ltd

And the Oil&Gas Index is made up of these 10 companies:

Reliance Industries Ltd
Oil & Natural Gas Corp Ltd
Indian Oil Corp Ltd
Bharat Petroleum Corp Ltd
Hindustan Petroleum Corp Ltd
Gail India Ltd
Petronet LNG Ltd
Castrol India Ltd
Indraprastha Gas Ltd
Oil India Ltd

If you are looking to invest in companies for the long term, selecting from these two lists might be a good idea.

3. Realty (Housing) seems to have turned around since demonetization. While the 6 month return is -7%, the 1 month return is +7%; this means that there was has been a sharp turnaround over the past 1-6 months. The 1 year chart clearly shows that.

BSE Realty Index 1 Year Performance
BSE Realty Index Performance

With this information in mind, you should be a little more prepared to make an informed decision on your next stock investments.