Investors have been on a shopping spree this year. The S&P BSE-Sensitive Index (Sensex) has gained 27% since the start of the year – heady returns by any imagination. But even this return pales when we compare it with what several of the sector indices of BSE delivered. Leading the pack with a perfect century, 100% returns, till December 22 is the consumer durables index – comprising jewellery, white goods and other consumer goods companies. Close-up next is the realty index, which delivered 98% returns followed by metals, capital goods and bankex. While the proposed recapitalisation of public-sector banks and the focus on recovering dues from the non-performing accounts (NPA) have lifted sentiments in the sector, metals companies have ridden the surge in prices of base metals on the commodity exchanges. Capital goods stocks seem to have perked up on expectations of a pick-up. Realty majors seem to have got a fillip from access to overseas funds and an edge over smaller rivals in the new real estate regulatory regime, even as demand remained sluggish in the housing segment. A perk-up in retail and commercial off-take is helping realtors with such assets.
But the big one, as mentioned earlier, was the consumer durables index. Heavyweights in the index like PC Jewellers, Titan, Rajesh Exports and Whirlpool had all hit their 52-week lows around December last year and have registered their 52-week highs close to the end of calendar 2017. PC Jewellers, which hit a low of Rs 176.53 in December 2016, scaled to its 52-week high of Rs 457.80 on December 19. Similarly, Titan hit a high of Rs 871.90 on December 20, 2017, after recording a low of Rs 307 in December 2016. Rajesh Exports and Whirlpool too notched up low-to-high returns of 97% and 89%, respectively. Other stocks in the index – Balaji Electricals, Nilkamal Plastics, Crompton Greaves, Blue Star and TTK Prestige – clocked gains of between 42% and 147%. Those are bumper returns for investors by any standards. While some of the performance can be attributed to overall buoyancy in the markets, operating performance too seems to have played a role for some. PC Jewellers, Titan and Whirlpool recorded healthy income growth ranging between 18-30% in the September quarter vis-a-vis the corresponding period of the previous year. Profits too were up by between 25-40% for the trio.
Rajesh Exports’ performance was less inspiring, though, with earnings declining 2.6% in the September quarter. Sales of consumer durables got a boost during the festive online sales by Amazon and Flipkart this year, as the online retailers decided to focus more on the category. Payouts under the pay commission is also keeping the sentiment in the sector bouyant, even as retail sales have got a fillip with two years of good monsoons. In the jewellery segment, the bigger players have introduced new branded ranges with distinct contemporary design styles to cater to an evolving consumer base, and this seems to have paid off. Opening up the online channel for sales has also helped some players. Clearly, there is a lot that is glittering in the consumer segment, and with most economists and market analysts looking at better times ahead for business, the disposable incomes should only grow in the coming year – spelling more spending. This party may, therefore, continue to rage on a little longer.