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Dec 11, 2023

The Best Performing Sectoral Indices Since Covid Lows

Nifty Metal and Nifty Auto have posted the best recovery since the Covid-19

Nifty Metal and Nifty Auto have posted the best recovery since the Covid-19 lows.

Nifty 50 and Sensex tumbled over 23% each in March 2020 as India imposed strict lockdowns, according to Bloomberg data.

NSE Media fell the most at 37.75%, followed by NSE Realty that slipped 37.44%. The pharma and fast-moving consumer goods declined 5.38% and 6.79%, respectively.

The sector indices, however, have tracked the recovery in the market since then.

Nifty Metal surged the most with a 280.6% gain over the three years since March 2020, helped by a 1,064.6% jump in Adani Enterprises Ltd. and 632.87% rise in Jindal Stainless Ltd.

Hot-rolled coil and rebar inventory remains low on a year-on-year basis, which suggests that exports are likely to remain high, the brokerage said in a June 3 note.

Domestic HRC prices fell by an average of Rs 500 per tonne on a week-on-week basis as demand remained muted, especially for longs, due to reduced stocking by the dealers factoring in the imminent monsoon.

While HRC prices are down 12% year-on-year, spot spreads rose 27% due to a 57% decline in coking coal prices.

National Mineral Development Corp. Ltd. has cut its iron ore prices by Rs 450 per tonne for fines, which the brokerage expects to be beneficial for companies such as JSW Steel Ltd., Jindal Steel and Power Ltd., and Shyam Metalics and Energy Ltd.

Companies have indicated benefits from lower coking coal prices are set to begin in the second quarter of the year, the brokerage said. It maintains a positive outlook on the ferrous space, driven by higher spot spreads.

Nifty Auto recorded a 210.9% growth since March 2020, as share prices of Tube Investments of India Ltd. surged 426.82% followed by those of Tata Motors Ltd. by 302.06% during the period.

Wholesale volumes for domestic passenger vehicles rose 13-15% on a year-on-year basis in May 2023, in line with the brokerage's estimates. Retail volume growth remained muted in low single digits, according to a June 1 note.

Volumes for two-wheeler segment were higher than the brokerage's expectations due to the wedding season and pre-buy of electric vehicles. The commercial vehicle segment volumes were below expectations.

Among the Nifty sectoral indices, Nifty Pharma registered the least growth of 96.77% since March 2020.

Nifty Pharma fell the least by 5.38% in March 2020. However, this temporary immunity has not translated into a comparative growth over the three years.

The indices grew 96.77% during the period, as compared with the 142.55% growth in the benchmark NSE Nifty 50.

The biggest contributors to the index were Aurobindo Pharma Ltd. and Glenmark Pharmaceuticals Ltd., with a growth of 40.28% and 39.23%, respectively. The biggest laggards were Gland Pharma Ltd., with a fall of 41.06% and IPCA Laboratories Ltd. with an 18.82% decline.

The U.S. generics pricing environment remains challenging, with the fall in prices experiencing a slow moderation, the brokerage said in a May 29 note.

Cost pressures remain due to elevated prices of raw materials, as the companies invest more in research and development initiatives and increase in sales and marketing costs post-Covid.

Hospital business experienced a steady rise in average revenue per occupied bed, while companies remain positive on growth and Ebitda margin for the current fiscal.

Management commentary suggests improvement in growth outlook for the industry, as competitive pressures ease in the diagnostic and pharmacy segments.

Taking the lowest spot, Nifty Media observed a 72.75% growth since its lowest point at Rs 979.05 on March 24, 2020. It currently stands at Rs 1,729.95.

The biggest contributors to growth were New Delhi Television Ltd. at 628.04% growth, and Network 18 Media & Investments Ltd. at 121.32% growth.

The biggest laggards were Hathaway Cable and Datacom Ltd. with a fall of 29.53%, and PVR Inox Ltd. sliding 25.01%.

Disclaimer: AMG Media Networks Ltd., a subsidiary of Adani Enterprises Ltd., holds 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.