After a year marked with big gains of over 25 per cent, the market experts are hoping that the rally will continue on Dalal Street in the new year and are particularly bullish on pharma, FMCG and private bank stocks. Defensive sectors like FMCG, pharma and banking, particularly private banks, witnessed an upswing in investor interest in 2012 as well.
The BSE banking sector emerged a the best performer among the 13 sectoral indices, outperforming the stock market benchmark Sensex, in 2012. The gain of 56.13 per cent in BSE banking index was more than double the Sensex's over 25 per cent rise. In terms of sectoral performance, BSE banking index was the top gainer, followed by real estate index which saw a smart jump of 52.52 per cent last year after suffering massive fall in 2011.
Will 'safety first' approach earn good returns in 2013?
Banking, FMCG funds top MF return charts in 2012
FMCG index saw a 48.94 surge, while the health care segment rose by 38.67 per cent in 2012. "FMCG, pharma and private sector banks continue to be safer bets and can be bought in dips. They are already in uptrend and still have much potential for upside," Rakesh Goyal, Senior Vice President, Bonanza Portfolio said. Metal sector has been cyclical in nature. Positive signs of economic recovery is likely to give boost to the sector which has been hammered down to much lower levels. Any further improvement in global demand, increased capacities by Indian firms can be beneficial this year, he said.
The BSE metal index gained 18 per cent in 2012. Market experts are of the opinion that signs of sluggish economy worldwide is of high concern. Indian markets have rallied on the back of recent reform measures in the country and positive news from global markets. However, any setback in any of these areas can lead to selling pressure, they said. IT stocks were beaten down during 2012, with the index falling over 2 per cent mainly on account of Euro zone crisis.
"We believe 2013 onwards lot of political pressure from the US (at least noise) will go away and Euro region will muddle its way, leading to some pick up in outsourcing activity. IT stocks are building in very low growth hence, any small improvement in demand may lead to significant upmove," Daljeet S Kohli, Head Research, IndiaNivesh Securities said. 2013 will be the year of stock selection and wide dispersion within the sectors. While macros will be positive for equity markets this year, ground realty in terms of corporate earnings will take time to recover, he said.
"We expect soft interest rates regime and benign inflation in 2013. However, politics will be a wild card as there are many state elections in 2013 and middle of 2014 general elections are due. We expect increased volatility depending upon noise generated from news flow," Kohli added.