A third of the gains made by the BSE benchmark index Sensex and a fourth of the returns posted by the 50-share Nifty have come from rallies in ICICI Bank, home loan major HDFC Bank and State Bank Bank of India.
With interest rates expected to ease, investors have been betting on banking stocks, which were laggards last year.
The Mukesh Ambani promoted Reliance Industries (RIL) has emerged the second- biggest contributor to the benchmark indices, chipping in with more than 11% to the Sensex and 9% to the Nifty. The stock has gained as much as 18% this year after losing a third of its value last year, a fall that shaved off 14% of the Nifty?s total decline of 1,510 points during the year. The other stock that has made a remarkable comeback is Larsen and Toubro. The stock lost more than half of its value in 2011 but has risen more than 35% this year. It is responsible for 9.5% of the 2,468 points gain in the Sensex and accounts for 7.7% of 805 points advance of the Nifty.
The other pack that has fared well this year is the capital goods space, which has also contributed to the gains reported by the benchmark equity indices. Since the start of the current rally in January, the Sensex and Nifty have clocked in gains of 2,468 points and 805 points, respectively, giving investors a return of 15.9% and 17.4%, respectively. Foreign Institutional Investors (FIIs) have so far bought close to $ 5.5 billion worth of Indian equities if the $1.9 billion dollar sale of HDFC stock by Citigroup is excluded.
This is a stark contrast to 2011, when the slowdown in economic activity weighed the most on infrastructure and capital goods companies. The sector was one of the worst performing with the BSE Capital Goods Index losing 47% in the year. As a result, as many as half of the ten worst performers of the year, including L & T, BHEL, JP Associates belonged to this industry.
Following a churning of the investor interest towards interest rate sensitive sectors, the defensive lot, containing stocks from FMCG and healthcare space, has underperformed the market. Hindustan Unilever, the top performer of 2011 that yielded 34% last year, has weighed 1%, the highest by any index constituents, on both the Sensex and the Nifty. The stock has lost 6% of its value this year. Cipla, Ranbaxy, Bharti and GAIL are the other laggards amongst the index constituents.
