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Metals - Top Performers in 2016 So Far
Jun 29, 2016

2016 so far has not been too good for the BSE Sensex, which has notched gains of barely 1%. Lot of factors, both domestic and international have played a role. On the domestic front, the IMD's prediction of a good monsoon this season saw the index rise post the announcement. However, the recently concluded results season has painted a mixed picture as far as earnings growth of India Inc is concerned. On the global front, there have been various triggers too. UK's decision to leave the EU last week has only raised the extent of uncertainty in the global financial markets.

In such a scenario, how have the sectoral indices performed? As can be seen from today's chart, metals have emerged as the top performers, while the pharma sector has performed the worst. The 11% gains in the metals sector could be attributed to the fact that the sector was one of the worst performing last year. Indeed, as global commodity prices crashed, stocks of metal companies saw their stocks get a beating. Some companies have talked about how the commodity prices could have bottomed out as a result of which quite a few of them have started factoring a gradual rise in prices.

The healthcare index lost around 9.5% in the six months so far. The sector continues to grapple with USFDA issues. Many of the heavyweights - Sun Pharma, Dr Reddy's, Lupin, Cadila Healthcare to name a few - have either received major observations or warning letters on their plants. This has impacted both revenues and profits. The problem is that the timeline for resolving these issues cannot be precisely determined and depends a lot on the degree of non-compliance. Little wonder then that the index has performed the worst so far. Notably, the healthcare index was the best performer in 2015.

Data Source: Ace Equity

This Chart Of The Day was published in The 5 Minute WrapUp - Dr Rajan's Successor Must Not Undo This

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