For the second year in a row, automobile and oil marketing companies (OMCs) emerged among the best performers on the bourses aided by falling commodity prices. Names include Ashok Leyland, Hindustan Petroleum Corporation and Maruti Suzuki in the BSE 100 universe, Bloomberg data showed.
India’s second largest commercial vehicle maker, Ashok Leyland is the top performer and yielded 70% returns so far this calendar. Strong medium and heavy commercial vehicle sales, and the sharp decline in global crude oil prices, helped the company turn profitable after posting a loss at a consolidated level last fiscal.
India’s largest passenger vehicle maker, Maruti Suzuki featured fifth in the list of top BSE 100 performers with close to 40% returns since the beginning of January 2015. The stock has yielded three times the returns in the last three years as the carmaker witnessed an increase in its share of the domestic passenger car market. Maruti now enjoys a market share of 49.5% in 2015 — the highest in three years.
OMCs were another favoured sector by investor as a sharp fall in global crude oil prices helped oil marketers consistently improve their margins. Diesel price deregulation also helped, and in the process aided the government reduce its subsidy burden and control its current account deficit — a major concern among foreign investors in 2012-13.
“The government’s swift action post the state elections in October 2014 to take long-pending decisions on diesel price deregulation and revision of natural gas prices benefited oil and gas companies over the medium to long term,” said Rakesh Arora, MD and head of research — India, Macquarie Capital Securities.
A barrel of Brent crude oil currently trades around $38.50 per barrel, down 43% from the 2015 peak price of $67.77.
Aurobindo Pharma (44.8%) and Divi’s Laboratories (30.2%) also featured in the list of top ten performers this year. Lupin — whose shares have soared 25.4% — is another healthcare stock favoured by investors. The BSE Pharma index has risen 11.2% so far this year against a 7.92% decline in the Sensex.
According to investment bank Deutsche, the long-term prospects of the Indian pharma industry look positive despite the downside risks due to US Food and Drug Administration regulatory issues.
“We expect Indian (pharma) companies to capitalise on their low leverage by seeking inorganic growth opportunities, mainly in regulated markets like the US, to add to and diversify their existing portfolios, while also acquiring front-end businesses in emerging markets,” Deutsche said in a note to investors last week.
Indiabulls Housing Finance, Godrej Consumer Products and Siemens completed the list of top 10 performers the year with gains ranging 25-35%, data showed.