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Rate-sensitives have led the recent market rally, which catapulted the benchmark indices to all-time high. The BSE Capital Goods (13.7%), BSE Bankex (10%) and BSE Auto (8.8%) have been the major gainers over the last month.
Defensives, on other hand, seem to have taken a back seat as BSE Healthcare (4.7%), BSE IT (2.5%) and BSE FMCG (0.9%) failed to beat BSE 30-share Sensex that gained 4.9% since the beginning of the rally.
Experts feel the outlook on rate-sensitives looks positive as ebbing inflationary pressures would give more room to the Reserve Bank of India (RBI) to lower the rates. “Macro-economic numbers have improved. The current account deficit reported for December quarter was at 0.9% of GDP, which was an 8-year low. Apart from this, RBI has improved the foreign exchange reserves through FCNR(B) deposits,” said Vinay Khattar, the vice-president, head (research), Edelweiss Capital Markets. The consumer price index (CPI) inflation for January slipped to two-year low at 8.79%.
In the capital goods space, ABB India (34.65%), VA Tech Wabag (29.03%), Crompton Greaves (20.34%) and Thermax (18.92%) have been the major gainers during the rally. Among bank stocks, Axis Bank (18.65%), ICICI Bank (14.68%), Yes Bank (12.31%), Bank of Baroda (12.06%), IndusInd Bank (9.68%) and Punjab National Bank (8.47%) have been the top performers.
Auto stocks that have gained most include Tata Motors (16.61%), Cummins India (16.52%), Motherson Sumi Systems (16.27%), Exide Industries (15.28%) and Mahindra & Mahindra (7.25%).
Experts maintain the cyclicals are set to outperform markets in the current calendar year. “The valuation differences between cyclicals and defensives are at historic highs. Once the pessimism in markets ends, cyclicals will start outperforming,” said Gaurav Mehta, vice-president, strategist, Ambit Capital.
Auto, capital goods and banks have added most to their market capitalisation. ONGC (R27,976 crore), Tata Motors (R20,964 crore), ICICI Bank (R15,695 crore), SBI (R14,226 crore) and Larsen & Tourbo (R13,434 crore) are the biggest market cap gainers.