BSE IT index up 30%, BSE FMCG almost 5% in last 3 months.
Auto sector scrips not fancied at least for the medium term.
Banking, realty stocks also affected by rise in interest rates.
Tania Kishore Jaleel
Mumbai, June 14 FMCG and technology stocks may not have been part of the last bull run of pre-January. But now that the tide has turned, sweeping the market southward, these stocks have bucked the trend, giving the best returns of any sector.
In the last three months, the BSE IT index gained 30 per cent. BSE Teck gained by more than 17 per cent, and BSE FMCG almost five per cent. During this period, the Sensex and the Nifty fell 1.09 per cent and 2.3 per cent respectively.
"Investors now seem to be moving out of sectors such as infrastructure, booking losses or profits and re-deploying funds in FMCG, pharma and technology," said Mr P.R. Dilip, Managing Director of Impetus Wealth Management Ltd. Since these sectors were not swept up in the market rally, their valuations are now looking attractive to investors, said marketmen.'Beta' trigger
For technology stocks, a depreciating rupee has brought cheer, said Mr V.K. Sharma, Whole Time Director and Head of Research at Anagram Stock Broking. Mr Alex Mathew, Head (Research Centre), Geojit Financial Services, says that a positive trigger for the technology sector is that the 'beta' of the scrips of this sector has come down. A high 'beta' stock would gain more than the market and also lose more than the market.
"A while back these were very high beta stocks. Now the beta of these stocks has come down to comfortable levels," he added.
As for the FMCG sector, it is a defensive one, say analysts. "These scrips are immune to rising inflation and interest rates. So investors seem to be playing it safe by reshuffling their portfolios to include these safer scrips," said Mr Dilip.
The sectors worst hit are auto and banking. In the last three months, BSE Auto has fallen 9.62 per cent and BSE Bankex 10.79 per cent. "Auto, banking and realty are the most affected by a rise in interest rates. With the interest rates likely to rise going ahead, these scrips are in for a bad time at least in the near future," said Mr Sharma.Margin squeeze
Spiralling crude, rising interest rates and increasing raw material prices all mean that the margins of these companies will get squeezed, added Mr Dilip.
Auto sector scrips are not fancied at least for the medium term, what with crude prices unlikely to reduce and interest rates likely to be hiked to rein in inflation, said analysts. As for the banking scrips, only investors looking for long-term gains should invest in them, said analysts.
"The PEs of the banking scrips are well below the PEs of the benchmark index. Also, most of these scrips have corrected a lot and have reached their yearly lows. So what one should do is buy these scrips at market dips and stay invested with a long-term view," said Mr Mathew