CY 2020 Equity Performance Show Sharp Divergences; 21 Nifty Stocks Gain YTD: Report

Brokerage firm Motilal Oswal in a report said equity market performance in CY 2020 so far can be defined by sharp divergences seen across and within sectors and companies. "This highlights the differentiated impact of COVID on various sectors", said the brokerage in its October 28, 2020 report titled Divergence: The story of 2020 so far....

CY 2020 Equity Performance Show Sharp Divergences; 21 Nifty Stocks Gain YTD: Report

Differentiated impact of Covid 19 on different sectors

Sectors that saw far lesser impact have been

1. Essentials such as healthcare, staples
2. Technology/ online/e-commerce

In comparison the sectors that got severely hit owing to the pandemic have been
1. Financials
2. Cyclicals (Metals, Infrastructure, Oil and Gas)
3. Discretionaries (Travel, Aviation, Restaurants, Hotels, etc.).

For the healthcare and technology sectors, the pandemic in fact served as a catalyst, triggering their sharp outperformance so far in CY20. In contrast, financials that remained the favoured sector for last few years had been the worst impacted with Bank Nifty shedding their entire gains of four years in comparison to the Nifty (Dec'15-Dec'19) in just H1FY21. This has had material implication for alpha creation in CY20. At the same time, it has led to the creation of a new set of leaders for the market, added the brokerage.

Nifty Regains To Pre-Covid Levels; But Only 21 Nifty Stocks Gain YTD

As per the last close, Nifty is down over 4 percent on a year to date basis. In the wake of the pandemic amid global sell-off, Nifty from its highs attained in January this year dropped approximately 38 percent to lows of 7610 in Mar'20. Post which the Indian markets have shown remarkable resilience and recovered most of its losses YTD.

But even as the headline indices have moved back to pre-Covid levels, only 21 stocks from the Nifty pack out of 50 scrips have given positive returns year-to-date.

Here are the top Nifty performers YTD

Nifty stocks	YTD returns in percentage terms
Dr. Reddy's Labs	72
Divi's Labs	70
Cipla	60
Infosys	47
HCL Technologies	46
Wipro	36
RIL	34
TCS	21
Asian Paints	21
Hero Motocorp	21
Britannia Industries	17
Nestle India	16
M&M	14
JSW Steel	13
HUL	13
UltraTech Cements	10
Sun Pharma	7
Tech Mahindra	5
Shree Cement	5
Grasim Industries	4
Titan Company	3

Top laggards are from the PSU and financials pack with IndusInd Bank being the worst performer of CY 2020 so far, declining as much as 61 percent. While others from the list include stocks like ONGC, Coal India, State Bank of India, Bajaj Finserv, IOCL, Axis Bank, GAIL, ITC and BPCL among others.

Further the brokerage maintains 'overweight' stance on IT, financials, banks, telecom, healthcare and auto going forward while remaining 'neutral' weight on consumer stocks.

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