Recap 2023, Marching into 2024 (Sectoral Gainers)

28 Dec 2023 , 02:53 AM

YEAR 2023 – WHY DO WE LOOK AT SECTORAL PLAYS

Why are we looking at sectoral plays. Most of us intuitively know which are the sectors that did well in year 2023. Here, we  not only look at the sectors in terms of the best returns over the last one year, but also the sectors that showed the best bounce from lows. As we shall see later, these two need not be the same. It is obvious that if the Nifty and Sensex are up anywhere between 18% to 20%, then the high weightage indices would also have done well. Here is the sectoral story of year 2023 and we shall look at these sectoral stories through the proxy of sectoral indices. After all, it is these indices that give the best representation of the leaders and the laggards within the sector. Here is the sectoral story of year 2023.

BEST PERFORMING SECTORS IN YEAR 2023

Here we look at the sectoral indices at a broad level and only subsequently would we delve into the break-up of the index components.

Generic Index	Closing Value	1-Year Returns	52 Week  Low Value	Bounce from 52-week Low
NIFTY AUTO	18,224.85	45.53%	11,901.85	53.13%
NIFTY PSU BANK	5,691.60	34.69%	3,528.75	61.29%
NIFTY HEALTHCARE	10,533.20	30.26%	6,482.80	62.48%
NIFTY FMCG	55,750.35	25.11%	43,550.10	28.01%
NIFTY IT	35,741.00	24.81%	26,184.45	36.50%
NIFTY METAL	7,847.75	18.30%	5,209.35	50.65%
NIFTY OIL & GAS	9,399.40	14.21%	4,632.70	102.89%
NIFTY PRIVATE BANK	24,820.45	14.02%	19,592.90	26.68%

Data Source: NSE / BSE

Clearly, auto is the star sector of the year with returns of 45.53% during the year with all-round participation from four-wheelers and two-wheelers. It was not just the EV shift but even the pick-up in rural demand that was the big theme of 2023. Rural demand pick-up may still be work in progress, but markets typically look ahead. The surprising part of the 2023 sectoral story is that; it was not just the high-beta sectors but even the relatively defensive sectors like FMCG, IT and healthcare that gained between 25% and 30%. Another stark contrast was that, contrary to previous years, it was the PSU bank index that clearly outperformed the private bank index. While the oil & gas index may have gained just 14.2% in the year, it is the sector that showed the best bounce; more than doubling from the lows of the year. The eight sectors captured above account for more than 87% of the overall market and hence give a fairly accurate and comprehensive picture of the market.

AUTO INDEX – STAR PERFORMER OF 2023

The table below captures the best performing stocks in the Auto Index. These are ranked on 1-year returns.

Auto Index	Closing Value	1-Year Returns	52 Week  Low Value	Bounce from 52-week Low
TVSMOTOR	2,001.30	92.86%	967.55	106.84%
TATAMOTORS	747.70	87.97%	381.00	96.25%
BAJAJ-AUTO	6,691.75	86.85%	3,520.05	90.10%
HEROMOTOCO	4,137.75	50.40%	2,246.00	84.23%
SONACOMS	610.90	44.88%	401.10	52.31%
BHARATFORG	1,236.00	39.62%	743.55	66.23%
MRF	1,21,718.00	37.40%	81,380.05	49.57%
M&M	1,707.95	36.76%	1,123.40	52.03%
MOTHERSON	96.40	31.25%	61.80	55.99%
TIINDIA	3,616.10	30.53%	2,375.00	52.26%

Data Source: NSE / BSE

Here are some interesting takeaways on the Auto Index. For the year, the index generated 45.53% returns and it bounced 53.55% from the lows of the year. Out of the 16 stocks in the Auto Index, none of the stocks generated negative returns during the year. Out of the 16 stocks in the Auto Index, 4 stocks generated returns of more than 50% while 10 stocks generated returns of more than 30% in the year. There were 3 two-wheeler companies in the top-5 auto stocks by returns in 2023.

PSU BANK INDEX – PICK OF THE BANKING STORY

The table below captures the best performing stocks in the PSU Bank Index. These are ranked on 1-year returns.

PSU Bank Index	Closing Value	1-Year Returns	52 Week  Low Value	Bounce from 52-week Low
PNB	95.55	69.37%	44.40	115.20%
CENTRALBK	49.55	51.62%	22.25	122.70%
MAHABANK	45.55	45.83%	22.80	99.78%
INDIANB	419.10	44.08%	252.20	66.18%
UNIONBANK	119.90	43.87%	60.35	98.67%
CANBK	441.80	40.86%	268.80	64.36%
PSB	43.45	32.98%	23.10	88.10%
BANKBARODA	233.55	30.63%	146.50	59.42%
IOB	43.55	30.03%	20.85	108.87%
BANKINDIA	111.45	24.80%	66.05	68.74%

Data Source: NSE / BSE

Here are some interesting takeaways on the PSU Bank Index. For the year, the PSU Bank index generated 34.69% returns and it bounced 63.18% from the lows of the year. Out of the 12 stocks in the PSU Bank Index none of the stocks generated negative returns during the year with SBI being the bottom performer. Out of the 12 stocks in the PSU Bank Index, 2 stocks generated returns of more than 50% while 9 stocks generated returns of more than 30% in the year. PSU banks have gained fundamentally in the year from expanding net interest income (NII) and widening net interest margins (NIM).

HEALTHCARE INDEX – SMART DEFENSIVE PLAY OF 2023

The table below captures the best performing stocks in the Healthcare Index. These are ranked on 1-year returns.

Healthcare Index	Closing Value	1-Year Returns	52 Week  Low Value	Bounce from 52-week Low
AUROPHARMA	1,069.05	142.16%	397.20	169.15%
GLENMARK	849.20	99.82%	369.05	130.10%
LUPIN	1,320.55	73.66%	628.00	110.28%
ALKEM	5,070.00	65.35%	2,980.00	70.13%
ZYDUSLIFE	686.40	64.24%	413.55	65.98%
MAXHEALTH	686.00	54.88%	411.90	66.55%
TORNTPHARM	2,250.80	43.13%	1,445.55	55.71%
DRREDDY	5,743.25	34.43%	4,175.10	37.56%
METROPOLIS	1,658.90	25.86%	1,171.35	41.62%
SUNPHARMA	1,250.35	25.23%	922.45	35.55%

Data Source: NSE / BSE

Here are some interesting takeaways on the Healthcare Index. For the year, the Healthcare index generated 30.26% returns and it bounced 63.13% from the lows of the year. Out of the 20 stocks in the Healthcare Index, only Biocon generated negative returns during the year 2023. Out of the 20 stocks in the Healthcare Index, 6 stocks generated returns of more than 50% while 8 stocks generated returns of more than 30% in the year. Healthcare stocks gained on a lot of value buying during the year as these stocks had been subdued after the frenetic rally in the aftermath of the COVID pandemic.

FMCG INDEX – BETTING ON RURAL DEMAND REVIVAL IN 2023

The table below captures the best performing stocks in the FMCG Index. These are ranked on 1-year returns.

FMCG Index	Closing Value	1-Year Returns	52 Week  Low Value	Bounce from 52-week Low
RADICO	1,653.55	65.38%	982.00	68.39%
COLPAL	2,508.80	56.72%	1,434.60	74.88%
ITC	460.40	37.21%	326.00	41.23%
TATACONSUM	1,033.15	32.00%	686.60	50.47%
NESTLEIND	26,264.35	30.06%	17,880.00	46.89%
GODREJCP	1,117.65	24.12%	870.30	28.42%
PGHH	17,197.95	24.00%	13,140.10	30.88%
MCDOWELL-N	1,090.50	23.00%	730.55	49.27%
BRITANNIA	5,299.45	19.40%	4,153.00	27.61%
EMAMILTD	513.15	19.19%	340.55	50.68%

Data Source: NSE / BSE

Here are some interesting takeaways on the FMCG Index. For the year, the FMCG index generated 25.11% returns and it bounced 29.20% from the lows of the year. Out of the 15 stocks in the FMCG Index, Varun Beverages and Dabur were the only 2 stocks to give negative returns for the year 2023. Out of the 15 stocks in the FMCG Index, 2 stocks generated returns of more than 50% while 5 stocks generated returns of more than 30% in the year. FMCG stocks saw a lot of defensive buying and also a bet on rural demand. Hindustan Unilever was one of the stocks to close flat for the year.

IT INDEX – SMART RETURNS DESITE PROBLEMS GALORE

The table below captures the best performing stocks in the IT Index. These are ranked on 1-year returns.

IT Index	Closing Value	1-Year Returns	52 Week  Low Value	Bounce from 52-week Low
PERSISTENT	7,468.30	88.86%	3,805.00	96.28%
COFORGE	6,260.00	62.59%	3,564.75	75.61%
LTIM	6,289.20	43.20%	4,121.00	52.61%
HCLTECH	1,476.55	42.04%	1,016.25	45.29%
MPHASIS	2,730.15	41.08%	1,660.05	64.46%
LTTS	5,206.70	38.01%	3,215.85	61.91%
TECHM	1,285.00	26.80%	981.05	30.98%
WIPRO	472.10	21.82%	352.00	34.12%
TCS	3,813.55	16.93%	3,070.25	24.21%
INFY	1,560.40	3.45%	1,185.30	31.65%

Data Source: NSE / BSE

Here are some interesting takeaways on the IT Index. For the year, the IT index generated 24.81% returns and it bounced 36.49% from the lows of the year. Out of the 10 stocks in the IT Index, all the stocks generated positive returns for the year 2023. Out of the 10 stocks in the IT Index, 2 stocks generated returns of more than 50% while 6 stocks generated returns of more than 30% in the year. IT stocks faced challenges like weak constant currency (CC) sales growth, subdued global tech spending and rising manpower costs. Despite these challenges, the IT index showed a sharp revival in the last quarter of 2023, as this index still contributes substantially to the profits of India Inc.

OIL & GAS INDEX – LATE REVIVAL HELPS THE HYDROCARBONS INDEX

The table below captures the best performing stocks in the Oil & Gas Index. These are ranked on 1-year returns.

Oil & Gas Index	Closing Value	1-Year Returns	52 Week  Low Value	Bounce from 52-week Low
OIL	381.50	82.13%	203.10	87.84%
IOC	131.75	68.58%	74.10	77.80%
HINDPETRO	415.75	65.20%	211.65	96.43%
GAIL	157.25	59.84%	91.05	72.71%
CASTROLIND	180.25	45.41%	107.40	67.83%
ONGC	208.00	41.95%	140.10	48.47%
MGL	1,193.90	39.65%	830.50	43.76%
BPCL	464.55	39.48%	314.05	47.92%
GSPL	311.75	13.04%	254.50	22.50%
AEGISCHEM	355.00	4.51%	280.00	26.79%

Data Source: NSE / BSE

Here are some interesting takeaways on the Oil & Gas Index. For the year, the Oil & Gas index generated 14.21% returns and it bounced 106.71% from the lows of the year. Out of the 15 stocks in the Oil & Gas Index, 3 stocks generated negative returns for the year 2023, while the rest gave positive returns. Reliance was almost flat for the year, but that is misleading as RIL hived off its NBFC business this year. Out of the 15 stocks in the Oil & Gas Index, 4 stocks generated returns of more than 50% while 8 stocks generated returns of more than 30% in the year. Oil & Gas stocks gave the sharpest bounce from the lows and that is due to the late last quarter bounce in oil stocks. Top gainers were across upstream and downstream segments and the big positive trigger came from the sharp drop in crude prices in Q42023.

PRIVATE BANKS INDEX – LAGGING PSU BANKS THIS YEAR

The table below captures the best performing stocks in the Private Banks Index. These are ranked on 1-year returns.

Private Bank Index	Closing Value	1-Year Returns	52 Week  Low Value	Bounce from 52-week Low
IDFCFIRSTB	88.45	58.80%	52.10	69.77%
RBLBANK	268.35	57.90%	131.60	103.91%
INDUSINDBK	1,611.10	32.86%	990.00	62.74%
AXISBANK	1,108.80	18.68%	814.30	36.17%
FEDERALBNK	156.50	15.83%	121.00	29.34%
ICICIBANK	1,001.10	11.28%	796.00	25.77%
KOTAKBANK	1,912.70	4.47%	1,643.50	16.38%
HDFCBANK	1,707.25	4.43%	1,460.25	16.91%
BANDHANBNK	239.80	0.44%	182.15	31.65%
CUB	148.80	-16.65%	119.50	24.52%

Data Source: NSE / BSE

Here are some interesting takeaways on the Private Banks Index. For the year, the Private Banks index generated 14.02% returns and it bounced 27.12% from the lows of the year. Out of the 10 stocks in the Private Banks Index, City Union Bank (CUB) was the only private bank to generate negative returns in 2023. Out of the 10 stocks in the Private Banks Index, 2 stocks generated returns of more than 50% while 3 stocks generated returns of more than 30% in the year. The reason for the relatively tepid performance of the private banks index in the year is due to the performance of HDFC Bank. Post the merger with HDFC, there were concerns raised by brokers over its ability to sustain margins, which led to the private banks index performing below expectations.

SECTORAL OUTLOOK FOR 2024

There are some sectoral stories that are likely to continue in the coming year. For example, auto will continue to be a key sector in terms of performance in 2024. It is not just about the EV story, but also about revival in rural demand and the revival in global demand for auto components. PSU stocks are most likely to take a breather in 2024 after a frenetic rally in 2023, as most of the positives are factored in. However, in the PSU space, defence and power may still be forces to reckon with. Capital cycle will be another big bet, but the big story will be the revival of the IT story in 2024. As investments in Generative AI pick up, it is once again going to be the big IT names that will be in the forefront. With US rates being cut and GDP still robust, hopefully global tech spend is also likely to pick-up in 2024.