Only six sectors give positive returns

Stock market performance in the first four months of current financial year "" between April to August 4 "" has been the worst in the past three year. All sectors in BSE-500 constituents, except for six, have given negative returns. All Sensex stocks are part of BSE-500.

An analysis of 98 sectors of the BSE-500 constituents for three years (April-March) and the current year to date (UTD) reveals that in last two years, 93 sectors had posted positive returns while all 98 sectors had offered positive returns in financial year 2003-04.

Between March and the beginning of August, BSE Sensex has posted negative return of 3.16 per cent. Despite that, 30 Sensex stocks as a group have been ranked among the top 10 performers within BSE-500. The comparable rank in FY 2006 was 47, in FY2005, 84 and in FY 2004, 79.

This could mean that investors who were buying mid cap and small cap stocks in the last three years have possibly started buying large cap Sensex stocks.

"With the liquidity in the market slowly drying up after the May melt down, both domestic as well as foreign institutional investors (FIIs) have stated looking for Sensex stocks as safe haven," said an analyst with a foreign brokerage.

With 51.27 per cent gain, engineering and construction sector has been the biggest market performer in the first four months of the current financial year.

It is followed by cold and hot rolled steel (24.8 per cent), white goods (11.36 per cent), ceramics (10.23 per cent), cement (6.74 per cent) and non-ferrous metal (+2.51 per cent).

Airlines, sugar, textiles, electrical equipment were the worst performers with negative returns of over 35 per cent each in the current year till date.

Refineries outperformed the Sensex with negative returns of 2.70 per cent compared to Sensex negative returns of 3.16 per cent. Diversified (-3.48 per cent), information technologies (-4.71 per cent), telecom (-9.08 per cent), banks (-11.20 per cent), automobile (-13.99 per cent) and personal care (-15.71 per cent) are other sectors that have underperformed the Sensex in current year to date.

The study reveals that engineering construction, cement and non- ferrous metals sectors have outperformed Sensex in all three years and the current year till date.

In contrast, IT sector has outperformed Sensex only once (FY06). Capital goods, telecom, steel and engineering underperformed Sensex only in the current year to date.

In FY04, all 98 sectors gave positive returns. However, personal care (+13.03 per cent), information technology (+31.77 per cent) and oil and gas (+34.11 per cent) underperformed Sensex (+83.38 per cent) in FY04.