Even as the capex cycle is expected to revive post-elections, cyclicals have lagged markets in the opening months of 2014. The BSE Capital Goods (-6.55%), BSE Auto (-2.57%) and BSE Bankex (-9%) have failed to shine in the current calendar year.

Market players are still sticking to defensives with BSE IT (1.77%), BSE Healthcare (3.68%) and BSE FMCG (-1.95%) leading the market benchmark Sensex (-3.2%) in 2014.

Brokerages are of the view that the auto sector could remain under pressure due to demand uncertainty. ?Given the continued uncertainty surrounding the demand environment, we expect the domestic passenger vehicles (PV) industry to face a 2% decline for FY14 (which implies 6% y-o-y growth for Q4FY14),? Ambit Capital said in a recent research note. ?While we expect FY14 to be a ?lost? year for automobile sales, we maintain a positive view on the volume growth for the long term,? it added.

Car sales in India fell 7.6% in January, the fourth straight month of

decline, according to figures released by the Society of Indian Automobile Manufacturers (SIAM), in a market set to fall for the second straight year. Car sales fell to 160,289 vehicles last month, as consumers kept a tight lid on spending, hurt by high interest rates and fuel costs in a slowing economy.

Among auto stocks, Motherson Sumi (25.17%) has been the top-performer in 2014. Rest of the stocks listed on the auto index have given negative returns in the current calendar year.

Banks have remained under pressure owing to concern over asset quality. ?Sentiment, almost across the board, is weak. Loan demand continues to slow and asset quality remains a concern,? said Morgan Stanley analysts in a recent research report.

?The pipeline of bad loans (measured in terms of CDR referrals) has gone up materially. Corporate stress remains very high in our view,? they added. Last year, BSE Bankex was down 9.36%. In the current calendar year, all bank stocks listed on the index have given negative returns. HDFC Bank is the least hit with a decline of 3.2%.

However, experts maintain that cyclicals are poised to outperform markets in the current calendar year. ?The valuation differences between cyclicals and defensives are at historical highs. This polarity has been diminishing since August, 2013, when markets witnessed panic selling owing to sharp rupee depreciation. Once the pessimism in markets ends, cyclicals would start outperforming,? said Gaurav Mehta, vice-president, strategist, Ambit Capital.

Cyclicals have outperformed markets since August-end with BSE Capital Goods gaining more than 35.39%, BSE Auto and BSE Bankex soaring 17.07% and 14.82%, respectively. IT, healthcare and FMCG indices have gained as much as 15% during this period.