Vijay Kumar Gaba

 In past one month I have read a lot of commentary about the smart investing, sectoral shifts, trade rotation, reflation trade, emergence of old economy etc. in the India equity markets. I find it pertinent to note the sectoral performances over three time periods – One year; Since Lock Down (25 March 2020); and Past three months when the unlock exercise meaningfully started.

Some of the key features of sectoral performances over these time frames could be listed as follows:

·         Nifty has given positive return over all three time frames, but one year return in miniscule 2.6%, much lower than the bank fixed deposit or liquid fund return.

·         Only two sectors IT and Pharma have consistently outperformed the benchmark Nifty over all timeframes. PSUs as a sector have been consistently the worst performer on all time frames.

·         Energy, Infrastructure, and PSUs have been worst performers in past three months. This is in spite of the enthusiasm in the heavyweight Reliance Industries.

·         Auto sector has performed well post lock down. While FMCG has mostly stagnated in past three months, underperforming Nifty over one year time frame.

·         Financials have also underperformed majorly over all timeframes.

·         Despite all talks about reflation trade, metals have underperformed over one year and 3 month timeframe, marginally outperforming the benchmark Nifty since lockdown.

On a closer look the market may appear fast rotating to relatively under owned sectors or sectors with material short positions, but when looked from a distance, it could be clearly seen moving in circles, going aimlessly round and round. The investors should therefore cut out the noise, and sit tight with their portfolios. In the end quality businesses that negotiate the pandemic and economic slowdown well and maintain sustainable growth shall indubitably do well. Jumping one sector to other in the hope of making some quick bucks will only lead to frustration. Remember, grass on the other side may or may not be greener, and the traffic in the other lanes may or may not be moving faster.