X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Which sector will outperform in 2012? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 3, 2012

    Which sector will outperform in 2012?

    2011 has been done and dusted with. And it hasn't been a particularly good year for Indian equities. In fact, 2011 turned out to be the second worst year in the last 14 year history of the Indian stock markets. After all, it is not every year that an index loses nearly 1/4th of its value. Macro factors, both globally as well as domestically took a heavy toll on the performance of the indices, causing them to drop sharply in value.

    However, if the performance of the BSE-Sensex was bad, there are a few sectoral indices that fared even worse. Take BSE Realty index for example. The investors in this index at the start of the previous year had to suffer the embarrassment of losing more than half of their wealth by the time the year came to an end. The capital goods index wasn't far behind either as it also shed close to 50%. The FMCG index was perhaps the only saving grace, edging higher by 10%, a very good performance in the context of the things.

    Source: ACE Equity

    But as Mr Buffett, the Oracle of Omaha has said, the investor of today does not profit from yesterday's growth. Thus, if we have to profit from our investments in the coming year, we will have to make an attempt to identify the sector that is likely to outperform the rest in the current year.

    In doing so, one thing can prove to be of enormous help. And it is nothing but the phrase that has been mentioned right at the beginning of Benjamin Graham's magnum opus, Security Analysis. It says 'Many shall be restored that now are fallen and many shall fall that now are in honor.' Contained within this phrase is a wealth of information we believe. In fact, the phrase, we believe, outlines one of the cornerstones of successful investing. It argues that nothing can go up forever and nothing can keep coming down forever. The reversal of the trend is nearly as immutable as the principle of gravity perhaps. Thus, the outperformer of today will turn into an underperformer of yesterday and vice versa.

    Source: BSE India

    Applying this principle to the question that we are trying to answer leads us to the point that 2012 may well be the year of power sector and capital goods sector than say the FMCG sector. Even a cursory study would confirm what we are trying to say. While quite a few FMCG stocks are now looking overpriced from a medium term perspective, valuations of the power and capital goods sector stocks in comparison are much more attractive we believe.

    And it isn't as if the demand for these sectors has reached its saturation point. If India were to take its GDP growth to the next level and lower its inflation rate, both power and capital goods sectors will have a very important role to play. Thus, investing in strong companies from these sectors is a bet that is expected to pay out more handsomely than say investing in an FMCG company or even a pharma company for that matter.

     

     

    Equitymaster requests your view! Post a comment on "Which sector will outperform in 2012?". Click here!

    2 Responses to "Which sector will outperform in 2012?"

    Abrar

    Aug 11, 2013

    The prediction did not work out till date, FMCG, IT and Pharma still outperforming

    Like 

    smathalye

    Jan 11, 2012

    I am pleased with the analysis.

    Like 
      
    Equitymaster requests your view! Post a comment on "Which sector will outperform in 2012?". Click here!
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Which Gods Will Bring Down the US Empire? (Vivek Kaul's Diary)

    Aug 17, 2017

    Mr Trump is in the White House and the gods are in their heavens; what's not to like?

    Will They Haul Off Trump's Statue, Too? (Vivek Kaul's Diary)

    Aug 16, 2017

    All across the country, the old gods become devils. New, gluten-free gods take their places...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Aug 17, 2017 (Close)

    MARKET STATS