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Realty, consumer durables doubled money in 2017; healthcare, IT laggards

When going got easy, investors made money with both hands on..

When going got easy, investors made money with both hands on Dalal Street in 2017. Not a single sectoral index on BSE concluded the year in the red.

Underdog real estate sector doubled wealth over the past 12 months and emerged as the best sector in the year gone by. The BSE Realty index climbed 106 per cent to 2,608.25 on December 29 from 1,263.94 on December 30, 2016.

Infrastructure status to affordable housing and implementation of RERA mainly supported the sector in last 12 months.

While 2017 was the year of consolidation, the sector's growth prospects for 2018 seem brighter, as the impact of RERA and GST would continue to unfold in 2018, said Amit Ruparel, Managing Director, Ruparel Realty.

With the affordable housing segment receiving industry status in the Union Budget and support from the Union government under the newly-introduced Pradhan Mantri Awas Yojana, the sector should witness steady demand in the coming year, he said.

Shares of Indiabulls Real Estate, Sobha, Unitech, DLF, Godrej Properties soared between 120 per cent and 220 per cent in 2017. Other stocks in the BSE Realty index also delivered positive reurns to investors in last 12 months.

With a rally of 102 per cent, consumer durables stood as the second-best sector of 2017. The BSE consumer durables index advanced to 22,689 from 11,237 during the same period.

Market experts said the sector was impacted post demonetisation during the last quarter of 2016. However, sales witnessed some improvement over subsequent quarters as the liquidity situation got better during the past 12 months.

VIP Industries, Titan Company, PC Jeweller and Bajaj Electrical from the consumer durables space spurted between 120 per cent and 200 per cent in 2017.

Expectation of a shift from informal to formal segment following the implementation of the goods and services tax (GST) also supported the consumer durables space in 2017.

Telecom, metals, capital goods, banking, auto and FMCG (fast moving consumer goods) sectors managed to outpace equity benchmark BSE Sensex in 2017. A rally in base metal supported metal stocks during the year gone by.

HDFC Securities believes the FMCG sector is poised to see earnings acceleration, which should sustain its rich valuations. The BSE FMCG index climbed 32 per cent to 10,695 in 2017.

"Most companies are witnessing green shoots in the rural market, and expect that govt's focus on improving rural incomes will boost consumption demand. We believe companies with a higher exposure to rural markets can surprise on growth," HDFC Securities said in a report.

ITC, Marico, Dabur, Jubilant FoodWorks, HUL, Britannia and Emami are some of the top picks of HDFC Securities in the FMCG space.

Entry of Reliance Jio stood as the gamechanger for the telecom industry, accelerating the consolidation in the sector. The highest decision-making body at the Department of Telecom — the Telecom Commission – on December 21 discussed the proposal to allow 100 per cent foreign direct investment in the sector through the automatic route, according to reports.

The BSE Telecom index advanced 49 per cent to 1675.03 on December 29, 2017 from 1120.64 December 30, 2016.

Power, IT, tech and healthcare sectors underperformed benchmark index. The BSE Healthcare index remained almost flat at 14,799, up just 0.50 per cent from 14,727 it had quoted at on December 30, 2016.

The year remained very challenging for the pharma sector, with both the domestic and exports markets coming under pressure. The domestic pharmaceutical industry witnessed the impact of GST implementation, leading to a dip in the domestic sales, which have started stabilising and are expected to post full recovery in FY2019. As far as exports are concerned, most of the companies are reeling under the USA pricing pressure, which came in on back of a distribution chain consolidation.

Earlier too, the US market had gone through pricing pressure, which most companies believe will subside in FY2019. Most Indian companies are sitting on a very healthy product pipeline (ANDA's) for the USA market, with many of them featuring among the highest ANDA filers in the US market. Apart from US, other export markets are growing at a healthy pace.

Sarabjit Kour Nangra, VP Research for pharma, Angel Broking, said, "As we move into CY2018, the domestic pharma industry will move to a more stable growth ground, from more challenging 2017. Apart from the growth opportunities, companies will continue to face challenges in USA, in the form of the FDA, which continue to have a strong vigil over the domestic companies manufacturing facility. In addition, domestic markets also have risk from the Indian pricing authorities, which cannot be accounted. Thus, in such a scenario, we believe that the investors should go for stocks, where valuations are very comfortable. Our current picks are Aurobindo Pharmaceuticals and Lupin."

The BSE Power, TECk and IT indices gained 20 per cent, 17 per cent and 11 per cent, respectively, during the year.

Original Article


ET Markets


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