Year Ender 2021: Defensive sectors on sellers radar in 2021; what to expect in 2022
The stocks from the defensive sectors such as pharma and fast-moving consumer goods have been the biggest laggards/underperformers than the peers and benchmark indices in the year 2021 so far.
The stocks from the defensive sectors such as pharma and fast-moving consumer goods have been the biggest laggards/underperformers than the peers and benchmark indices in the year 2021 so far.
Most of the analyst pointed out that the stocks from the said sectors have given below 10 per cent returns in the year as compared to other sectors such as metal, realty and PSUs.
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In year-to-date, both Nifty Pharma and FMCG indices have registered meagre growth of around 8 per cent. Similarly, the Nifty Private Bank have been the topmost loser with hardly 3 per cent growth in the calendar year 2021 so far.
In comparison, both the benchmark indices – Sensex and Nifty50 – have reported growth between 21-23 per cent in the year, as against around 15 per cent growth in the calendar year 2020. While BSE mid-cap grew 36 per cent and small cap outperforming all other indices jumped 60 per cent.
Despite weak performance of the said sectors, the analysts believe these sectors may play well in the coming year. Amid rising covid cases in the country has already reported a buying sentiment in pharma related stocks such as Sun Pharma, Divis Lab, Apollo Hospitals among others.
The other sectors that saw major re-rating were the IT and Healthcare and both sectors benefited immensely from the pandemic, Raghvendra Nath, MD of Ladderup Wealth Management said.
He added, the pharma and healthcare were direct beneficiary of the pandemic, the IT sector benefited from the “work from trend” that has now become the norm globally, prompting companies to upgrade their systems and processes to meet the demand.
Nath believes that both these sectors shall see only nominal gains in 2022 as the valuations are quite elevated right now. The Nifty IT in the current year has reported a growth of around 22 per cent.
Meanwhile, the sectors such as paper, unlock theme stocks were also on the sellers’ radar in 2021, however, depending on the current situation of new covid variant Omicron, these sectors and stocks may do well in the coming year, said TradeSwift’s Director Sandeep Jain speaking to Zee Business.
Post the rising cases of covid in the country, especially metro cities, the unlock theme stocks such as movie theatre, hotels and hospitality stocks have been trading mute for the couple of sessions.
“Amid demand concerns, Travel and hospitality were one of the sectors, which came under heavy pressure, followed by automobile sector also didn't do well primarily due to consumers postponing big ticket purchases and supply side shortages,” Mohit Ralhan, Managing Partner & Chief Investment Officer of TIW Private Equity said in his comment.
While the healthcare sector in India did well, globally it gave only marginally positive returns in 2021 largely due to the high returns it generated in 2020, which resulted in pricing in of potential upsides, Ralhan mentioned stating further that the utilities sector also underperformed the broader indices.
Being bullish on utilities as the sector is relatively resistant to economic cycles. TIW Managing Partner said that the 2022 in general is expected to be a volatile year for stock markets across the globe, and therefore the allocation to the utilities sector in the equity portfolio is expected to increase to stem the overall volatility.
“The allocation to Auto sector and hospitality sector is not likely to increase in 2022 and they may still underperform the broad market indices,” Ralhan said before concluding his comment.
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