Best and worst performing sectors and stocks in FY23

Siddharth Oberoi, Founder and CIO, Prudent Equity

Stocks of banking and financial services, especially PSU banks like UCO Bank, Karur Vysya and Karnataka Bank should be considered among the companies which have performed exceptionally well in the last 12 months. In the most recent quarter, these companies’ revenue grew by double digits while their earnings more than doubled. This is mostly due to the huge shortfall in provisioning that most of these banks have made as compared to the corresponding period last year, when it was higher than normal due to the consequences of COVID-19. Also, these banks have experienced significant improvement in their asset quality, which, while still high compared to private sector banks. Private sector stocks like South Indian Bank and DCB have outperformed other private sector banks.

Unsurprisingly, the FMCG industry has also performed quite well, despite being hit the most negatively by key inflation we all saw last year. Mrs Bector Foods & Specialties, a company in this sector, got listed in late 2020. In the last six months, the company’s earnings grew by almost 50%, owing to the festive season and new product launches and capacity addition. In the 9M FY23 period, the company has already surpassed its FY22 profitability, and still has one more quarter to go. In the last one year, this stock has given a return of about 90 per cent.

Speaking about the sector that struggled this year, it would be IT, which was inevitable, considering what the industry has produced since COVID started and through FY22. Although there have been some exceptions; Firms like Cigniti Tech and KPIT Tech have had excellent financial results. While KPIT grew its profits by over 30% in a very difficult environment for the sector, Cigniti saw its earnings nearly double over the past several quarters. In the 9M FY23 time frame, both these businesses have already surpassed their FY22 earnings.

AR Ramachandran, Co-Founder & Trainer – Tips2trades

Nifty IT and Nifty Metals have been the two worst performing sectors in the last 1 year owing to the economic headwinds faced by the global markets. With the rising interest rate hike cycle now almost at its end, investors should buy quality IT and metal stocks like Infosys, TCS and Tata Steel which are now available at very attractive valuations. As the US and European markets have finally stabilised, FY24 should be much better for these two regions this year.

Nifty PSU Bank and Nifty FMCG have been two stellar performers in FY23. The rising interest rate cycle has benefited banks in general and public sector banks in particular, leading to excellent performance driven by strong margins. However, FY204 could be tough as interest rate hikes for PSU banks and investors moving to better asset quality banks like ICICI, Kotak and HDFC Bank led to a below average year for PSU banks in FY24. Can go In the FMCG space, ITC’s returns this year could be much lower than in FY23 as a gradual uptick in the consumption cycle could lead to stronger buying in HUL, Nestle, Marico than ITC especially in the second half of FY24 Needed

Suresh Mansharmani, an OKR Coach, Business Coach, Presidential Awardee, Co-Founder Tajurba

Through 2023, India’s economy is expected to continue to grow, and the stock market is likely to reflect this growth. However, the performance of individual sectors and stocks may vary depending on various factors. This article will discuss the best and worst performing sectors/stocks in India for the financial year 2023/24.

Best Performing Sectors/Stocks

technology: The technology sector in India has been performing exceptionally well in recent years, and this trend is likely to continue in 2023/24. This sector includes companies that are involved in software development, IT services, and hardware manufacturing. Some of the top performing companies in this sector include Infosys, Tata Consultancy Services (TCS), Wipro and HCL Technologies. The growth of the sector is driven by the adoption of digital technology and the move towards cloud computing.

Health care: The healthcare sector in India is also expected to perform well in the financial year 2023/24. This sector includes companies involved in pharmaceuticals, medical devices, hospitals, and healthcare. Some of the top performing companies in this sector include Sun Pharmaceuticals, Dr. Reddy’s Laboratories, Apollo Hospitals and Fortis Healthcare. Due to an aging population, the region is likely to benefit from increased government spending on healthcare and increased demand for healthcare services.

consumer goods: The consumer goods sector in India is also expected to do well in 2023/24. This sector includes companies that produce and distribute fast-moving consumer goods (FMCG) such as food, beverages, personal care products, and household items. Some of the top performing companies in this sector include Hindustan Unilever, Nestle India, ITC and Britannia Industries. The sector will benefit from rising consumer demand, especially in rural areas.

Worst Performing Sectors/Stocks

real estate: The real estate sector in India has been struggling in recent years, and this trend is likely to continue in 2023/24. This sector includes companies involved in the development, sale and leasing of residential and commercial properties. Some of the top companies in this sector include DLF, Sobha, Godrej Properties and Oberoi Realty. The sector is facing challenges like excess supply, rising interest rates and sluggish demand due to increase in interest rates.

basic infrastructure: The infrastructure sector in India is also expected to face challenges in 2023/24. This sector includes companies developing roads, highways, airports and other infrastructure projects. Some of the top companies in this sector include Larsen & Toubro, IRB Infrastructure, AdaniPorts and SEZ. The sector is facing challenges such as delay in execution of projects, funding issues and regulatory hurdles.

Banking: The banking sector in India has faced challenges in recent years, and this trend is likely to continue in 2023/24. This sector includes public and private banks providing banking and financial services. Some of the top banks in India include State Bank of India, HDFC Bank, ICICI Bank and Axis Bank. The sector is facing rising non-performing assets (NPAs), increased competition and regulatory challenges.

Lastly, the performance of sectors and stocks in the Indian stock market can vary depending on various factors. While some sectors and stocks are likely to do well in financial year 2023/24, others may face challenges. Investors should carefully analyze the performance of individual sectors and stocks before making investment decisions.

Sachin Jasuja Founding Partner – Investment Products/Equity at Centricity Wealthtech

Best performing stocks included TVS Motors, ITC, M&M, Cummins India and Bank of Baroda and worst performing stocks included Adani Green, Heritage Foods, Mphasis, Lux Industries and Thyrocare Technologies.

The best performing sectors are FMCG, Auto, Bank and the worst performing sectors are IT and Pharma.

Abhishek Banerjee, Founder & CEO, LotusStudy

While the broad markets are flat and down for small caps, there is a huge divergence between stocks which explains why the Indian stock market is still a stock picker market. For example, a stock like Brightcom Group, which is held by many mutual funds, has lost 85% of its value over the past 12 months. Similarly, stocks like Tanla Solutions, which powers Airtel’s digital ledger technology for clearing SMS headers, lost 63% of their value and a popular company like 8K miles lost almost 57% of its value. Sector-specific IT services are the worst hit, while some top-performing stocks such as Goldstart, which manufactures durables, is up over 450% and food or consumer staples like edible oils, given the disruptions to the food supply chain. Has performed up to 800%.

Subhasish Kar, Founder & CEO, Techbuzz Consultancy Services

Despite the challenges facing markets in recent quarters, there has been notable performance from defensive sectors including food and beverages, tobacco, health care equipment and consumer durables. These sectors have benefited from stable consumer spending, leading to positive returns. The general industrial sector has also seen positive returns, buoyed by the central government’s capex push.

To take advantage of these top performing sectors, our outperformance screener identifies high growth stocks such as ITC, Siemens, Varun Beverages, Polycab India and KEI Industries. However, sectors such as commercial services, utilities, media and retailing have underperformed with the utilities sector facing significant corporate governance issues related to the Adani Group. Consequently, our underperforming screener includes stocks such as Adani Total Gas and Adani Transmission, which have underperformed the Nifty 500 by more than 50 percentage points.

In light of these trends, it is essential to appreciate the importance of sector analysis and company-specific issues while investing in the stock market. By tracking the best and worst performing sectors and stocks, investors can make decisions that align with their investment objectives.

Arun Chulani, Co-founder, First Water Capital Fund

There are business cycles and there are market cycles. I believe one should focus on the former as the latter can usually bother you. I believe there are some areas that deserve attention from the government including infrastructure, energy transition given the inflationary pressures caused by the conflict, and areas that should receive attention because of the +1 China story .