Just likely 2019, the year 2020 is also likely to be the year of equities.
The S&P BSE Sensex rallied about 15 percent, and the Nifty50 was up nearly 13 percent in 2019, but the broader market indices underperformed which is one of the factors that kept investors away from celebrating new highs.
Top sectors that outperformed in 2019 are Realty (up 24 percent), followed by Consumer Durable (up 21 percent), Banks (up 20 percent) and IT (up 10 percent).
Top losers among sectoral indices include Metal that fell 13 percent, followed by Capital Goods and Autos that were down 11-12 percent respectively.
Experts are of the view that 2020 will be a year when there will be dips that could be used by investors to get into sectors and stocks that are likely to hog the limelight. So, can we say that sectors that outperformed in 2019 will continue their bullish run in 2020?
Well, the smart money is likely to move towards beaten-down sectors such as autos, mid & small caps. Action is likely to continue in financials, consumer space, and Oil & Gas, suggest experts.
“2020 will be a year of equities and just like 2019, high bouts of volatility will be the flavour. We expect sharp deep corrections, which will be bought into. Stock pickers will be rewarded,” Dharmesh Kant – Head – Retail Research, IndiaNivesh told Moneycontrol.
“Cyclical stocks like financials, metals, materials, and automobiles will outperform while FMCG and utilities will see muted participation. Mid & small-cap segments will be highly fragmented. One has to be stock-specific. Stock-specific outperformance is expected in Mid Cap and Small Cap segments,” he said.
We have collated views from different experts on sectors that are likely to hog the limelight in 2020:
Expert: Rusmik Oza, Sr. VP & Head of Fundamental Research at Kotak Securities’
Sectors likely to outperform in next year are:
Agro Chemicals (due to above normal rainfall seen this year);
Corporate Banks (earnings could go up in multiples between FY19-22E.);
Larger NBFCs (Post NBFC Liquidity crisis, larger Housing Finance companies, and NBFCS with strong parentage will garner higher market share);
Construction (companies are having a healthy order book position although the pace of new order intake has slowed down.
Mid Cap Cement (Healthy earnings growth and improving RoEs will lead to re-rating);
Oil & Gas (After a poor show in FY19-20, earnings growth to be very healthy in FY21.
Within the space we are more bullish on gas distribution companies as revenue & earnings visibility is high).
Expert: Gautam Duggad, Head – Institutional Research, Motilal Oswal Financial Services Ltd.
• Banking: Market share gains for private banks from PSU Banks and NBFC to continue. The asset quality cycle turned around and can drive write-backs.
• Telecom: Repairing of balance sheets of telecom players as a consequence of easing competitive intensity in the sector.
• Automobiles: BS6 transition and rebound in Auto monthly numbers.Expert: Dinesh Thakkar – CMD, Tradebulls Securities
Governments focus on disinvestments is expected to continue to bridge the gap of widening fiscal deficit, non-banking PSU stocks would continue to do well in the coming year as well.
Within financials, private sector banks would continue their outperformance, while metals could see a sustained upmove in case the ongoing global trade war comes to a standstill.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.